[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]
CHARITABLE CONTRIBUTIONS FOR SEPTEMBER 11: PROTECTING AGAINST FRAUD,
WASTE, AND ABUSE
=======================================================================
HEARING
before the
SUBCOMMITTEE ON
OVERSIGHT AND INVESTIGATIONS
of the
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
NOVEMBER 6, 2001
__________
Serial No. 107-67
__________
Printed for the use of the Committee on Energy and Commerce
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
_______
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COMMITTEE ON ENERGY AND COMMERCE
W.J. ``BILLY'' TAUZIN, Louisiana, Chairman
MICHAEL BILIRAKIS, Florida JOHN D. DINGELL, Michigan
JOE BARTON, Texas HENRY A. WAXMAN, California
FRED UPTON, Michigan EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida RALPH M. HALL, Texas
PAUL E. GILLMOR, Ohio RICK BOUCHER, Virginia
JAMES C. GREENWOOD, Pennsylvania EDOLPHUS TOWNS, New York
CHRISTOPHER COX, California FRANK PALLONE, Jr., New Jersey
NATHAN DEAL, Georgia SHERROD BROWN, Ohio
STEVE LARGENT, Oklahoma BART GORDON, Tennessee
RICHARD BURR, North Carolina PETER DEUTSCH, Florida
ED WHITFIELD, Kentucky BOBBY L. RUSH, Illinois
GREG GANSKE, Iowa ANNA G. ESHOO, California
CHARLIE NORWOOD, Georgia BART STUPAK, Michigan
BARBARA CUBIN, Wyoming ELIOT L. ENGEL, New York
JOHN SHIMKUS, Illinois TOM SAWYER, Ohio
HEATHER WILSON, New Mexico ALBERT R. WYNN, Maryland
JOHN B. SHADEGG, Arizona GENE GREEN, Texas
CHARLES ``CHIP'' PICKERING, KAREN McCARTHY, Missouri
Mississippi TED STRICKLAND, Ohio
VITO FOSSELLA, New York DIANA DeGETTE, Colorado
ROY BLUNT, Missouri THOMAS M. BARRETT, Wisconsin
TOM DAVIS, Virginia BILL LUTHER, Minnesota
ED BRYANT, Tennessee LOIS CAPPS, California
ROBERT L. EHRLICH, Jr., Maryland MICHAEL F. DOYLE, Pennsylvania
STEVE BUYER, Indiana CHRISTOPHER JOHN, Louisiana
GEORGE RADANOVICH, California JANE HARMAN, California
CHARLES F. BASS, New Hampshire
JOSEPH R. PITTS, Pennsylvania
MARY BONO, California
GREG WALDEN, Oregon
LEE TERRY, Nebraska
David V. Marventano, Staff Director
James D. Barnette, General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
______
Subcommittee on Oversight and Investigations
JAMES C. GREENWOOD, Pennsylvania, Chairman
MICHAEL BILIRAKIS, Florida PETER DEUTSCH, Florida
CLIFF STEARNS, Florida BART STUPAK, Michigan
PAUL E. GILLMOR, Ohio TED STRICKLAND, Ohio
STEVE LARGENT, Oklahoma DIANA DeGETTE, Colorado
RICHARD BURR, North Carolina CHRISTOPHER JOHN, Louisiana
ED WHITFIELD, Kentucky BOBBY L. RUSH, Illinois
Vice Chairman JOHN D. DINGELL, Michigan,
CHARLES F. BASS, New Hampshire (Ex Officio)
W.J. ``BILLY'' TAUZIN, Louisiana
(Ex Officio)
(ii)
C O N T E N T S
__________
Page
Testimony of:
Amundsen, Chris, President and CEO, Interim, United Way of
America.................................................... 68
Beales, J. Howard, III, Director, Bureau of Consumer
Protection, Federal Trade Commission....................... 88
Bender, Robert, Jr., Executive Director, American Red Cross
in Greater New York........................................ 60
Bollon, Vincent J., General Secretary-Treasurer,
International Association of Fire Fighters................. 75
Bove, Joyce M., Vice President for Grants and Special
Projects, September 11 Fund New York Community Trust....... 71
Farley, Michael, Vice President, Chapter Fundraising,
American Red Cross......................................... 65
Healy, Bernadine, President, American Red Cross.............. 33
McLaughlin, Elizabeth........................................ 22
Spitzer, Hon. Eliot, New York State Attorney General......... 25
Steiner, Russa, wife of William R. Steiner, employee of
Marsh, Inc., 97th floor of North Tower, World Trade Center,
accompanied by Robert O. Baldi............................. 12
Taylor, Herman Art, President and CEO, Better Business Bureau
Wise Giving Alliance....................................... 95
(iii)
CHARITABLE CONTRIBUTIONS FOR SEPTEMBER 11: PROTECTING AGAINST FRAUD,
WASTE, AND ABUSE
----------
TUESDAY, NOVEMBER 6, 2001
House of Representatives,
Committee on Energy and Commerce,
Subcommittee on Oversight and Investigations,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:30 p.m., in
room 2123, Rayburn House Office Building, Hon. James C.
Greenwood (chairman) presiding.
Members present: Representatives Greenwood, Stearns, Burr,
Whitfield, Bass, Tauzin (ex officio), Deutsch, Stupak, and
DeGette.
Also present: Representative Markey.
Staff present: Jennifer Safavian, majority counsel; Casey
Hemard, majority counsel; Ann Washington, professional staff
member; Brendan Williams, clerk; Chris Knauer, minority
investigator; and Bruce Gwinn, minority professional staff
member.
Mr. Greenwood. Good afternoon. This hearing of the House
Oversight and Investigations Subcommittee will come to order.
The Chair recognizes himself for 5 minutes with an opening
statement.
No people in the world are more cheerful givers than the
people of the United States. This generosity springs from our
enduring legacy of volunteerism and self-reliance. As early as
1831, Alexis de Tocqueville in his celebrated work Democracy in
America observed that a citizen of the United States is taught
from infancy to rely upon his own exertions in order to resist
the evils and the difficulties of life. He looks upon the
social authority with an eye of mistrust and anxiety, and he
claims its assistance only when he is unable to do without it.
More than 70 percent of American households make annual
charitable contributions to an astonishing array of worthy
causes. Equally remarkable is the fact that more than 100
million Americans volunteer their time on behalf of their less
fortunate neighbors. The monetary value of the time devoted to
volunteer work is equally as staggering, an estimated $225
billion a year.
Following the horrific events of September 11, the people
of our magnificent Nation have extended their hands to help
those in need in a measure unprecedented, even for Americans.
Millions of our fellow countrymen, many of them children, have
given freely of their time, their talents, their wallets,
pocketbooks and piggybanks. We have given freely not only our
money, but also our blood. More than $1.2 billion has been
collected by organizations working on relief and recovery
efforts. To put this number into some context, contributions
following the Oklahoma City bombing totaled $45 million.
Hurricane Andrew evoked $110 million in donations for the
American Red Cross. Again, we are at $1.2 billion for the
September 11 event, and still the donations pour in.
All of us in Congress owe a profound and heartfelt
gratitude to the patriotic American people who have responded
to our Nation's greatest tragedy with an unprecedented charity.
We have met the true test of giving, which John Wesley, the
founder of the Methodist Church, described in these words: Do
all the good you can, by all the means you can, in all the ways
you can, in all the places you can, at all the times you can,
to all the people you can, as long as ever you can.
Distributing the proceeds of this generosity both
efficiently and fairly, however, poses unparalleled logistical
challenges never before confronted by even the most experienced
aid officials. It is for this reason that it is important to
hear directly from the charitable organizations that have
raised this unprecedented amount of money, to discuss their
efforts to distribute these funds.
We will hear today from a representative of one of
America's most honored organizations, the American Red Cross,
including from its president, Dr. Bernadine Healy. You will
also hear from representatives of the United Way and the New
York Community Trust, two organizations that have worked
together to create the September 11 Fund. And we will hear from
the International Association of Firefighters.
The most donations to date have been received by the
American Red Cross, which has received pledges and
contributions totaling $564 million, with at least $437 million
of that total already received. The September 11 Fund has
received $337 million in pledges and contributions, with $250
million of that having been received so far. The International
Association of Firefighters has raised almost $51 million. To
date, they have distributed $20,000 to each family of the 340
firefighters, 3 EMS workers and 1 fire patrol officer who lost
their lives in the line of duty on September 11.
With so much money raised and with so many charities
involved, it is critical that the trustees who serve as
stewards of these gifts provide the public with an accounting
of how they will be distributed and to whom, for it is equally
important that everyone who needs financial assistance receives
that assistance and no one is overlooked.
All of us who hold public office appreciate the daunting
task of determining how to distribute public funds equitably
and efficiently. The shared responsibilities of these charities
in managing these vast amounts of charitable contributions is
no less a public trust. Unfortunately, recent reports have
raised a number of concerns regarding the distribution of these
funds. Accounts continue to surface of individuals who are
either unable to obtain monetary assistance from any of the
disaster organizations, nonprofit groups, foundations,
government agencies and corporations involved, or who find the
processes that are required to navigate to obtain the
assistance too lengthy and too complex.
Mrs. Russa Steiner is just such an individual. I am sorry
to say that Mrs. Steiner lost her husband of 32 years in the
attack on the World Trade Center. Mrs. Steiner has graciously
offered to provide the subcommittee with her story and to
explain to us what she has had to go through in an effort to
receive the financial assistance she will need to keep her home
and to educate her children. I wish she were appearing before
us today under happier circumstances, and I am grateful that
she has mustered the courage to testify so that others may gain
from her efforts.
We will also hear from Liz McLaughlin. Tragically, Mrs.
McLaughlin lost her husband Robert in the World Trade Center.
Mrs. McLaughlin's experience with the various charitable
organizations is different from Mrs. Steiner's, and I hope the
two perspectives will assist us in getting a better picture of
what victims' families are going through.
I am also pleased that Eliot Spitzer, the attorney general
of the State of New York, is here today to explain his efforts
with the relief organizations to ensure equitable fund
distribution. And he has already started a public Website that
describes what various charities are doing to provide relief.
It can be located at www.wtcrelief.info. That is
www.wtcrelief.info. We look forward to learning more about this
site as well as a creation of a data base that these relief
organizations can use to coordinate assistance to victims with
other organizations. His vision and his leadership were the
impetus for its creation.
We are also interested in reports of fraudulent
solicitations that Attorney General Spitzer and others have had
to contend with in aiding the victims of September 11. Sadly, I
understand that there have been reports of potential scams
targeting donors. As painful as it may be to acknowledge that
there are people so lacking in human compassion that they would
try to capitalize on the suffering of others, it is essential
that any reports of fraudulent solicitations be investigated
thoroughly and immediately. Anyone found to be responsible for
these despicable acts must be swiftly brought to justice. That
is why I am pleased that we have also before us today the
Federal Trade Commission and the Better Business Bureau's Wise
Giving Alliance. They are here to speak about complaints
received and their investigations into these potential scams
and abuses. They are also here to help us be aware of the
potential for this type of fraud and to know how to guard
against becoming victims of these scams.
I hope the testimony from today's witnesses will encourage
the public to continue its outpouring of support while
providing renewed confidence in charitable fund-raising. I hope
that the information provided to us today can assist families
of victims who are still in need of assistance. I thank our
witnesses for their testimony.
And now I recognize the ranking member of the subcommittee,
the gentleman from Florida, Mr. Deutsch, for his opening
statement.
Mr. Deutsch. Thank you, Mr. Chairman.
Just to share a couple of thoughts. Up until September 11,
I represented a community in south Florida that had the
distinction of having the largest, at least in terms of
monetary value, disaster in the history of America, which was
Hurricane Andrew. And I think when we think about the disaster
of Hurricane Andrew, even though I represent south Florida, it
obviously pales in comparison in order to many, really, if not
thousands, literally tens of thousands of magnitude compared to
what America and what New York in particular is facing and
individuals are facing because of the September 11 disaster.
I think one of the things that has hit us in terms of
September 11 is, again, just the magnitude, incomprehensible
magnitude, of what occurred and has affected so many of us
directly, personally. Five thousand people at least who
perished--just on a personal note, my wife lost a cousin by
marriage, a firefighter, who actually passed away at the World
Trade Center on that date. But as someone who originates from
New York and had the distinction actually to be a high school
classmate with the attorney general from New York, so many
Americans and people around the world feel they are New Yorkers
now. Some of us are New Yorkers by birth. Some of us are New
Yorkers by circumstance since September 11.
I happened to be in New York just this past weekend and
been there previously since September 11 to visit Ground Zero,
but I was there this weekend on some family issues and was in
the Soho area. And it was a very bizarre experience because you
can still smell the World Trade Centers. It is very, very eerie
a number of weeks later. And just in a sense, our job in terms
of this committee is really hopefully going to be constructive
at this hearing today.
I think that much has been raised, and it is probably not
enough. I spoke with someone involved in President Clinton's
efforts in terms of scholarship funds, and the actuarial
numbers for the children who lost a parent is probably going to
be at least $100 million, and that they are continuing to raise
money--only about one-tenth toward their goal. And I think so
many other needs are there. So I hope that no one leaves this
hearing, even with the astronomical support of the American
people that has occurred, to think that we have met those
needs.
Obviously, there is a lot to learn in terms of just
distributing the effort, but as someone who up to this point
came from a community that had experienced, as I said, the
largest disaster in American history--in fact, it is
interesting, our slogan was the same slogan as has been so
often stated now: United we stand. That was the name of the
community organization in south Florida. And I am sure we will
be successful. And I believe that this hearing hopefully will
be a constructive effort in those regards.
Mr. Chairman, I would like to submit Mr. Dingell's
statement for the record as well and yield back the balance of
my time.
Mr. Greenwood. Without objection, the statement of the
ranking member of the full committee Mr. Dingell will be
incorporated into the record.
[The prepared statement of Hon. John D. Dingell follows:]
Prepared Statement of Hon. John D. Dingell, a Representative in
Congress from the State of Michigan
Mr. Chairman, I want to thank you for holding this hearing. In the
aftermath of the cowardly attacks on innocent citizens on September 11,
we all watched in awe at the bravery of the firefighters, emergency
personnel, and police officers who, in selfless acts of heroism, rushed
into the center of danger to save as many as they could. Immediately
thereafter, we saw the American people also rush to the forefront and
respond with a level of generosity and compassion as great as at any
other time in our history.
Not only has the amount of money collected broken all records, but
the fact that this money was collected largely without solicitation
demonstrates the tremendous depth of caring and resolve that Americans
feel. I am pleased to have learned that the Federal Trade Commission
(FTC) has found no evidence of fraud in connection with funds collected
to help victims of the September 11 atrocities. All complaints received
by the FTC have been investigated and not a single case of fraud has
been substantiated.
At the same time, I understand some have found the process of
applying for assistance to be unduly burdensome. Therefore, I am very
interested to know what the charities and other officials are doing to
get needed assistance to people in the most efficient manner possible.
These tragic and horrific events have tested many of our
institutions. None have been more tested than those charged with
initial and early response, including charitable organizations. The
American Red Cross, for example, operates under a congressional charter
which holds it responsible for maintaining an adequate, safe supply of
blood and blood products. Recognizing that its supply of blood is not
adequate to deal with mass casualties from terrorist attacks, the Red
Cross has begun to set up additional facilities. However, some have
raised questions about the appropriateness of using contributions to
its Liberty Fund to fund a program that will allow it to freeze and
store blood for up to 10 years. Charities such as the Red Cross
certainly must be prepared to provide all needed services should a
terrorist attack occur in the future, and increasing the supply of
frozen blood is a necessary and useful step. The only question is how
best to fund these important programs.
Mr. Chairman, again I thank you for holding this hearing. The
American public deserves to know that its generosity and benevolence is
not being misdirected, and how their donations are being allocated to
help those in dire need.
Mr. Greenwood. The Chair recognizes the chairman of the
full committee, the gentleman from Louisiana, Mr. Tauzin.
Chairman Tauzin. Thank you, Mr. Chairman.
Mr. Greenwood, I want to deeply express to you the
appreciation of the committee for holding this very timely
hearing. This public forum will allow charitable organizations,
law enforcement authorities and other charity experts and
members to explore several important issues surrounding the
massive outpouring of contributions arising from the September
11 attacks upon our country, issues that are meaningful to tens
of thousands of Americans who have sought to help many victims
of these attacks. It also provides us an opportunity simply to
appreciate this enormous heartwarming generosity of the
American people.
Think about it with me. Since September 11, America has
given more than $1.2 billion--$1.2 billion to charitable
organizations working on the relief and recovery efforts
related to these attacks. This amount dwarfs contributions
following any previous disaster in our Nation's history. As
others have mentioned, this is more than 25 times that which
was generously provided to the victims of the Oklahoma City
bombing and more than 10 times the amount of monies that were
donated in the wake of Hurricane Andrew, a hurricane that we in
Louisiana were familiar with as it tore through the heart of my
district after ripping up the Florida communities. These
figures do not account for the many, many ways that Americans
are otherwise giving unselfishly of their time and effort to
lend support to the victims' families.
Of course, this immense and sudden outpouring of relief
efforts also creates some rather large logistical problems.
Today we hope we can examine and perhaps ease many of the
concerns related to making certain that the money goes to where
people intended it to go. What mechanisms, for example, are
being created to assure that funds directed to relief and
recovery are distributed as efficiently as possible; how the
charity is keeping track of victims to ensure that nobody in
need of assistance is left out.
There is no doubt that the charitable organizations at the
heart of this influx of donations are providing very valuable
and necessary services, yet questions have been raised about
the disbursement of funds, particularly by charitable
organizations that have many nonrelated projects to fund. So
how can Americans be sure that the money they send out of the
enormous generosity of their hearts is being distributed as
they intended?
And finally, sad to say there is the ever present
temptation for fraud in circumstances like these. Our
responsibility as members of this committee is to help head off
any scam artists in the marketplace who always show up and prey
on America's best intentions with their own evil designs. So we
look forward to the discussion about measures that guard
against deception and scams: What people need to know to avoid
the high-tech fraud schemes that everyone seems to be faced
with these days, and what are the law enforcement authorities
doing to protect against this and other types of charity fraud.
Some of the questions and discussions here today will touch
an area troubling to donors, yet the hearing should be seen in
the end as an effort to strengthen our trust in the charities
that are doing so much to help Americans express a wonderful
spirit of giving.
Again, Mr. Greenwood, I want to thank you on behalf of the
committee for the hearing, and we look forward as always to the
testimony of the witnesses who have generously given their time
to explore these serious questions with us. Thank you, Mr.
Chairman.
[The prepared statement of Hon. W.J. ``Billy'' Tauzin
follows:]
Prepared Statement of Hon. W.J. ``Billy'' Tauzin, Chairman, Committee
on Energy and Commerce
Thank you, Chairman Greenwood, for holding this very timely hearing
today. This public forum will allow charitable organizations, law
enforcement authorities, other charity experts, and Members to explore
several important issues surrounding the massive outpouring of
contributions arising from the September 11 attacks--issues that are
meaningful to the tens of thousands of Americans who have sought to
help victims of these attacks. It also provides us an opportunity
simply to appreciate this heartwarming generosity of the American
public.
Think about it. Since September 11, American's have given more than
1.2 billion dollars--1.2 billion dollars--to charitable organizations
working on relief and recovery efforts related to the attacks. This
dwarfs the contributions following any previous disaster.
As others have mentioned, this is more than 25 times what was
generously provided the victims following Oklahoma City, more than 10
times what was donated in the wake of Hurricane Andrew. And these
figures do not account for the many, many ways Americans are otherwise
giving unselfishly of their time and effort to lend support to the
victims' families.
Of course, the immense and sudden outpouring of donations to relief
efforts also creates an immense logistical problem. Today I hope we can
examine, and perhaps ease, many of the concerns related to making
certain the money goes where people intended it to go.
What mechanisms, for example, are being created to assure that
funds directed to relief and recovery are distributed as efficiently as
possible? How are charities keeping track of victims to assure nobody
in need of assistance is missed?
There is no doubt that the charitable organizations at the heart of
this influx of donations are providing valuable and very necessary
services. Yet questions have been raised about the disbursement of
funds, particularly by the charitable organizations that have many
other, non-related projects to fund. So how can Americans be sure the
money they send to a general relief organization is distributed as they
intended it to be?
Finally, sad to say, there's the ever-present temptation for fraud
in these circumstances. One responsibility of the members of this
Committee is to help head off scam artists in the marketplace who prey
on American's best intentions with their own evil designs.
I look forward to our discussion today about measures that guard
against deception and scams. What do people need to know to avoid the
high-tech fraud that seems so easy to pull off these days? What are the
law enforcement authorities doing to protect against this and other
types of charity fraud?
Some of the questions and discussion today will touch on areas
troubling to donors. Yet this hearing should be seen, in the end, as an
effort to strengthen our trust in the charities that are doing so much
to help Americans express their wonderful spirit of giving.
Again, I thank you Mr. Greenwood for holding this hearing, I look
forward to an open discussion with the witnesses that appear before us
today.
------------------------------------------------------------------------
Organization Amount Raised Amount Disbursed
------------------------------------------------------------------------
New York Times 9/11 Neediest $43 million....... $9,500,258.26
Fund.
American Red Cross.............. $564 million $154 million
pledged ($505
received).
Families of Freedom Scholarship $30 million....... $0 \1\ (Awards
Fund. begin 1/2001)
United Way September 11th Fund.. $337 million $47 million
pledged ($250
received).
New York State WTC Relief Fund.. $32 million....... $0
NYC Firefighters 9/11 Disaster $51,972,262 \2\... $6,880,000 \3\
Relief Fund.
Savation Army................... $62,470,786....... $8,500,000
------------------------------------------------------------------------
\1\ Given students' financial aid process, awards begin in January 2001.
\2\ As of 11/5/01.
\3\ They have sent $20,000 checks to 344 families. One $10,000 check was
sent out on 9/25. Another $10,000 check was sent out on 10/19.
Mr. Greenwood. The Chair thanks the chairman of the
committee and recognizes the gentleman from Michigan Mr. Stupak
for an opening statement.
Mr. Stupak. Thank you, Mr. Chairman, and thank you for
holding this hearing.
Since September 11, countless Americans have reached in
their pockets in response to the horrors perpetrated on our
country by terrorists. They reached into their pockets and have
given more than $1.2 billion. This is by far the biggest
charitable contribution response ever to an event, and we must
make sure that the donor intent is honored. Hundreds if not
thousands of people in my own district in northern Michigan
have held dozens of fund-raisers and have made huge efforts to
give money, food and equipment to those affected by the events
of September 11. Ed Janisse of WCUP Radio and Mr. Paul
Tesanovich representing the Keweenaw Bay Indian community drove
over 19 hours from my district here to Washington, DC, to hand-
deliver a check to the Red Cross. They drove all the way down
here because they wanted to be absolutely sure that the money
went straight into the hands of those directly involved with
assisting the victims.
In making sure that victims are getting what they need, the
Trial Lawyers of America have established Trial Lawyers Care, a
nonprofit organization that will provide free legal services to
victims and their families who file claims with the September
11 victims compensation fund. Over 1,500 attorneys throughout
the country have volunteered to represent fund claimants
throughout the process without a fee. That is the level of
dedication and care we Americans are showing.
But where is the money going? American Red Cross has raised
most of the money of all the charitable organizations. Through
their Liberty Fund they have received pledges and contributions
totaling $564 million, over half a billion dollars. How can we
be sure the money is being used to benefit those most in need?
Those are the questions we should be asking today throughout
this hearing. I look forward to hearing the testimony of
today's witnesses to shed some light on this urgent question.
Mr. Chairman, I thank you holding for this hearing and
yield back the balance of my time as I look forward to hearing
the witnesses.
Mr. Greenwood. I thank the gentleman for his statement and
for yielding, and recognize the gentleman from Florida Mr.
Stearns for 5 minutes for his opening remarks.
Mr. Stearns. Mr. Chairman, thank you for holding this
hearing, and I think all of us, given the outpouring of support
for Americans since the tragedy of September 11, we as Members
of Congress have a fiduciary responsibility to ensure that the
contributions that are made by the American people are
expressly for the purpose of aiding the fellow citizens in the
wake of these attacks.
In my home State of Florida, we had Hurricane Andrew, and
that raised about $110 million, and that has been dwarfed by
the contribution by Americans for this tragedy on September 11.
And I would like to say, Mr. Chairman, publicly that there is a
direct correlation or relationship between the degree of
charitable contributions that this Nation has provided because
of September 11 and the goodness of this Nation. And the
goodness of this Nation is recognized by this outpouring.
Mr. Stupak mentioned he had a constituent who came down
with a check. That is the kind of involvement the Americans
have. When people look at this tragedy, there is goodness
coming out through the Americans' hearts and its outpouring and
a generous amount, and that alone should establish this Nation,
throughout history, we have been charitable. But this is
another case that we're charitable for ourselves.
As I mentioned earlier, we do have responsibility to look
at some of the complaints perhaps from watchdog groups that
have expressed alarm at the Red Cross that the money is not
getting to the victims and their family members. And as the
chairman Mr. Greenwood and Mr. Tauzin has indicated, there is a
possibility of fraud, and we want to make sure that doesn't
occur.
When you look at the average contribution from the American
family, it is roughly about 3 percent of their income, and so
there is an outpouring. There is a desire to help out.
Mr. Chairman, I have a bill involving charitable
foundations, which I introduced to abolish an antiquated excise
tax on nonprofit foundations' pay on their net investment
income. But basically, if my bill passed, it would give the
charitable foundations more money to help more Americans. And I
hope my colleagues will help me pass this part of the stimulus
package.
As I mentioned, one of our biggest challenges perhaps in
this hearing is to understand--because the intentions of people
are not being impugned, we are just trying to understand in a
large measure this enormous amount of goodness and outpouring
by the American people, how is it efficiently and effectively
being used. And with our ability of telecommunications software
and the like, we are able to focus that and understand where
the money is going.
We have had, obviously, reports of scam activities, and we
should get to the bottom of that. The FTC has indicated in its
testimony that, ``today the findings of fraud are few and far
between.'' So we cannot let the few and far between overwhelm
the goodness that is occurring here. So with the three panels,
keep that in mind, because I'm heartened that the Federal Trade
Commission is going to continue to aggressively monitor and
investigate these reports.
The findings of fraud are few and far between, but this
hearing is very important, Mr. Chairman, as Mr. Tauzin has
mentioned. You ought to be commended for bringing this to the
forefront in allowing the American people to understand this. I
look forward to the hearing, and I yield back the balance of my
time.
Mr. Greenwood. I thank the gentleman from Florida, and I
recognize the gentleman from New Hampshire Mr. Bass.
Mr. Bass. And I thank the chairman for holding this timely
hearing and wish to associate myself with the remarks of my
colleagues on this subject so as not to repeat myself.
I would add that, having read over the last week or 2
articles that begin to intimate that much of the generosity and
outpouring of concern and compassion for those who were victims
of September 11--I see, for example, today in the Wall Street
Journal an article entitled ``Giuliani's Fund for Uniformed
Survivors Has Yet to Disburse Any of the $100 Million.'' We are
beginning to hear stories about that many survivors--we may
hear some today--have yet to receive anything from any
charitable organization beyond what their insurance company may
have paid.
This is all very disturbing to me and certainly justifies
this hearing, because the obligation that we have as the
committee of jurisdiction and oversight here to assure that the
public trust is held and that there is tremendous generosity
that has been shown that has really unified this country
doesn't turn to cynicism and mistrust of government and
charitable institutions is really paramount. And I hope that we
can reassure America through this process that these funds that
are really American peoples' funds are going to be put to good
use and going to wind up helping the victims of this horrible
tragedy that occurred on September 11.
Now, as most of my colleagues and some of the witnesses may
know, my friend from Florida Mr. Stearns, and Mr. Tauzin, and
Mr. Deal and I and some other members of the committee
introduced a bill called the American Spirit Fraud Prevention
Act on October 2. The bill has been marked out of this
committee. It would double penalties that the FTC may impose
for violations of the FTC Act that aim to take advantage of
emergencies and disasters, and this would apply to those
fraudulently posing as charities and those perpetrating more
commercial traditional scams.
In preparing the legislation, I was surprised to find that
the FTC, which is the Federal Government's principal consumer
protection agency, actually has very little authority to
protect citizens from false, misleading or deceptive practices
involving organizations that might claim a charitable purpose.
These organizations must, of course, answer to the IRS, but
their focus is and should be the tax treatment and status and
not consumer protection. These organizations are also regulated
to a varying degree by State law, but it is not hard to imagine
that one could easily file papers with the State to create a
shield for consumer protection laws while State charity
overseers and tax examiners consider the true benefit of the
organization.
I want to be clear, I believe that most charities, or
basically almost every charity, do an amazing job and provide
comfort and support that allows many Americans to simply get
through the types of tragedies that we are talking about.
Nevertheless, perhaps Congress should examine changing the
oversight and consumer protection rules that apply to
charities. And I am very much interested in hearing from
whoever cares to comment, and I yield back.
Mr. Greenwood. The Chair thanks the gentleman from New
Hampshire and recognizes for her opening statement the
gentlelady the from Colorado Ms. DeGette.
Ms. DeGette. Thank you, Mr. Chairman. I don't have a formal
prepared statement, and I just did get off an airplane so I
could be here for this hearing.
Let me just say that I am concerned, as all of us are, that
an unprecedented amount of contributions from everybody from
multimillionaire rock stars and movie stars on down to the kids
at Adams City High School and elementary schools in my district
have contributed to this relief effort, and every single person
who contributed to this effort has done so with the best of
intentions that these funds will go to help the victims'
families of this terrible tragedy, to help the firefighters'
funds, to help all of the caregivers who helped. And it is our
job as Congress to have ongoing oversight to make sure there is
no fraud or abuse.
I think that the agencies, to my knowledge, have acted
remarkably well and in an orderly fashion today. But the thing
we need to balance is on the one hand getting relief to the
families of those who died and getting it quickly. As the
mother of two young daughters, I can only imagine what it must
be like to suddenly lose the main breadwinner of the family and
then to have to go around begging hat in hand even to pay the
mortgage payment or to pay for Halloween costumes or
Thanksgiving dinner or anything that constitutes the fabric of
a family. On the one hand, we need to expedite those payments.
On the other hand, we need to make sure that the processes that
we put into place are not fraught with waste or abuse, which
would be so easy because we are talking about such large sums
of money.
I commend you for having this initial hearing. I am not
sure what we will learn today in substance, but maybe we can
get some parameters, Mr. Chairman, for future hearings of this
subcommittee. And I look forward both to the testimony today
and also for our future oversight of this issue and yield back
the balance of my time.
Mr. Greenwood. The Chair thanks the gentlelady and
recognizes the gentleman from Kentucky Mr. Whitfield for an
opening statement.
Mr. Whitfield. Mr. Chairman, I also want to thank you for
having this timely hearing. I think, as has been said many
times already today, the American people have shown they are a
compassionate people by contributing over $1.2 billion to this
incident alone. And all of us know and have read and have
followed and have been admirers of the Red Cross, the United
Way, Salvation Army and many other charitable organizations
throughout our country, and all of them have really good
reputations, and I don't think that any of us think that they
have involved themselves in any deliberate wrongdoing. However,
I do think it is imperative with the amount of money involved--
and I can imagine the complexity of distributing that much
money, that it is a difficult process, and I hope today we can
focus on those difficulties. And I am glad that the attorney
general of New York is here today because I know that he was in
the forefront of establishing a data base to help prevent
duplicative payments and to help charitable organizations have
a better understanding of who is receiving funds and who is not
receiving funds, and I would like to hear about that.
I also saw a recent survey that said many if not most
Americans have trouble finding the information they need to
evaluate charities and make decisions about giving, and I think
that is another area we can look in. But, as I said, I don't
think this is a hearing that anyone is being accused of
anything, but all of us hope that from the information gathered
we can come out with a more effective system that will provide
the necessary help for people who need it desperately at this
time. And I yield back my time.
Mr. Greenwood. The Chair thanks the gentleman and thanks
all the members for their opening statements.
[Additional statement submitted for the record follows:]
Prepared Statement of Hon. Michael Bilirakis, a Representative in
Congress from the State of Florida
Mr. Chairman, I want to commend you for holding this hearing today
to examine charitable giving in the wake of the September 11th
terrorist attacks and to discuss ways in which charitable organizations
deliver promised assistance to the victims and their families.
Since the devastating events of September 11th, Americans young and
old have opened their hearts and their pocketbooks to help the victims
of this terrible tragedy. To date, over $1 billion has been raised for
relief efforts, proving once again that Americans are the most
compassionate and generous people in the world.
Mr. Chairman, I am alarmed at reports which suggest that charitable
organizations are not acting in good faith to use the contributions of
generous Americans to deliver timely assistance to the victims of
September 11th and their families. How do we explain to elementary
school children that their hard-raised contributions may not actually
be used to help the families in need?
Today I am wearing a pin made by the students of Cypress Woods
Elementary School in Tarpon Springs, Florida. These students sold
patriotic pins for $1 each and raised a total of $3,500. This amount
was matched by a corporation for a total of $7,000. Another elementary
school in Tarpon Springs, Brooker Creek, raised $2,300 for relief
efforts.
It would send a terrible message to these children and the
community if charitable organizations do not use their contributions to
directly aid the victims and their families.
I have introduced a resolution--H. Con. Res. 259--praising the
people of the United States for their patriotism and generosity in
donating their money, time, and blood to support the victims of
September 11th. The resolution also commends charitable organizations
for their hard work in providing assistance but urges them to use the
funds collected for the purposes for which the money was given. H. Con.
Res. 259 also urges charities to limit the extent to which donations
are used for administrative costs and condemns individuals or groups
that fraudulently use contributions for their own personal gain.
Mr. Chairman, I look forward to hearing from our witnesses today to
assess the current situation and to determine what actions we may all
take to improve the delivery of aid to those who need it most: the
victims and families of September 11th. Many Americans lost their lives
by the hands of terrorists on September 11th, and their memory and
sacrifice for their country should be honored by providing for the
needs of their families in a timely and effective fashion.
Mr. Greenwood. I would like to introduce the first of three
panels. We have with us Mrs. Russa Steiner from New Hope,
Pennsylvania, my constituent, and Ms. Elizabeth McLaughlin of
Pellham, New York. And let me say it is an extraordinary thing
to have witnesses here just 8 weeks after their loss. And this
committee thought long and hard about even inviting victims
such as yourself to be with us, and let me honor your presence
by noting for the record that it was only because in each of
your cases you thought you might be able to speak for and help
other victims that you have agreed to come and testify, and we
thank you for that.
Mrs. Steiner is accompanied by her attorney Mr. Robert
Baldi.
And we also welcome the Honorable Eliot Spitzer, New York
State attorney general. And we welcome Dr. Bernadine Healy, the
president of the American Red Cross. And thank you for joining
us today.
I believe you are aware that this committee is holding an
investigative hearing, and in doing so, it is our custom to--it
is our practice of taking testimony under oath. Do any of you
have any objections to offering your testimony under oath?
Seeing no objections, I would also advise you under the
rules of this House and rules of this committee you are
entitled to be represented by an attorney. Mrs. Steiner has her
attorney with her as much for moral support as anything else.
Do any of the others of you wish to be represented by an
attorney?
Seeing no such concern, I would ask you to rise and raise
your right hand.
[Witnesses sworn.]
Mr. Greenwood. So saying, you are now under oath and may be
seated.
And, Mrs. Steiner, we will begin with you. You are
recognized for your statement. And, again, thank you for your
courage in being with us today.
Mrs. Steiner. Thank you.
Mr. Greenwood. If you turn on your microphone and pull it
very close, because it is rather directional.
TESTIMONY OF RUSSA STEINER, NEW HOPE, PENNSYLVANIA, WIFE OF
WILLIAM R. STEINER, EMPLOYEE OF MARSH, INC., 97TH FLOOR OF
NORTH TOWER, WORLD TRADE CENTER, NEW YORK, ACCOMPANIED BY
ROBERT O. BALDI, ESQUIRE; ELIZABETH McLAUGHLIN, PELLHAM, NEW
YORK; ELIOT SPITZER, NEW YORK STATE ATTORNEY GENERAL; AND
BERNADINE HEALY, PRESIDENT, AMERICAN RED CROSS
Mrs. Steiner. Tuesday, September 11, began for me like any
other. My husband awoke at 4:30 a.m. to prepare for a commute
to a job that he loved. He left at 5:30 a.m. to get a head
start on his workday, which had been his practice throughout
his career. I fell back to sleep, which was my routine.
Since it was a beautiful Tuesday morning on my way to work
at a nonprofit mental health facility, I stopped off at Rice's
Outdoor Market. While walking through the aisles, I overheard a
news bulletin on the radio which prompted me to ask a vendor to
please repeat what I thought I had just heard, a plane hit the
World Trade Center. I remember saying to this vendor, my
husband works there, and noticed her horrified expression.
I proceeded immediately to my car to phone my husband.
Unsuccessful in my attempt, I went home and tried again to
reach him, to no avail. I called work and explained that I
would be in as soon as I heard from my husband. I next put on
the television in our family room with the phone by my side and
witnessed the second plane hit the South Tower, saw both towers
crumble, and watched in disbelief as the horrors of that
infamous day unfolded.
After speaking with our three children, my daughter
Meredith, 23, who was at work in Philadelphia, my son Jordan,
who is 21, attends the University of Delaware, and my youngest
son Darren, 18, at Penn State, our two older children came
directly home to be with me and to await the revelations.
While dealing with the confusion and shock of what was
transpiring, we held out hope for a miracle not unlike 5,000
other families. We frantically took turns calling hospitals,
radio and television stations, coworkers of my husband and
researched the Internet to obtain information. In our
desperation, we filed a missing person's report with the FBI
and notified New York State and local police departments. We
gathered and submitted dental records for my husband, DNA
samples, and presented them to the authorities. We created
missing posters, which family members placed around New York
and on the Internet asking for any information on my husband's
status.
After 3 weeks of being in shock and frozen at home, the
status of the missing persons from the Ground Zero area changed
from missing to missing, presumed dead. It was at this time
that I realized that I had to address the extensive amount of
mail that I had thrown in a box on September 11. As my husband
customarily handled the mundane chore of family maintenance, I
was both inexperienced and overwhelmed by the enormity of this
task. In my attempt to manage our affairs, I forwarded a letter
to our creditors explaining the situation, asking for
consideration and extensions, if possible, without penalties.
As my children attempted to resume regular life, I
continued at home by following all leads for assistance by
calling numbers which would appear in the newspapers, on CNN,
on MSNBC, and any referrals that were offered to me.
On Saturday, October 6, at 7:30 a.m., I left the house for
the first time since September 11, along with an advocate from
NOVA, who picked up my family for a trip to New York. She took
us on an appointment to the New Jersey Family Assistance Center
at Ground Zero. After the site visit, I left our three children
at the family center in the company of volunteer companions
because I did not want to subject them to the continuing pain
of retelling our story, explaining our financial status or be
subjected to asking for handouts. I visited the trailers with
advocates who assisted me in navigating me through the mazes of
service, charities and organizations that potentially we would
qualify for, along with addressing the legal necessities. We
returned home that day at 11:30 p.m.
As my husband was the sole supporter of our family and kept
all records on his computer, I attempted to reconstruct
documentation to satisfy all obligations and handle accessing
benefits by myself in order not to incur any additional
expenses. As the majority of creditors have shown some
compassion, I have also had to deal with threats to incur
additional collection activities.
During this time, I have felt supported and been deeply
moved by family, friends, neighbors, community members and
total strangers. I was especially touched by an organization at
the New Jersey Family Assistance Center, a Taiwan Buddhist
Compassion Relief Organization, Tzu Chi Foundation, USA, who
donated $1,000 to my family on the spot. Additionally, Penn
State University donated a scholarship for my younger son
Darren, a freshman at their Altoona campus. Another act of
kindness shown to us was by the Count Your Blessings Fund
established by a Bucks County builder, C.W. Schrenck, who
offered to pay a semester's tuition for my older son Jordan.
After 32 years of a successful and happy marriage, I am
struggling to adjust to my new life situation both emotionally
and financially. By sharing my personal experience with this
committee, I hope it is beneficial to your investigation. I
have requested that Robert Baldi assist me in sharing the
specific information regarding details of all donations. Thank
you.
[The prepared statement of Russa Steiner follows:]
Prepared Statement of Russa Steiner, Wife of William R. Steiner
Tuesday, September 11th began for me like any other. My husband
awoke at 4:30 a.m. to prepare for a commute to a job that he loved. He
left at 5:30 to get a head start on his workday which had been his
practice throughout his career and I fell back to sleep, which was my
routine. Since it was a beautiful Tuesday morning, on my way to work at
a non-profit mental health facility, I stopped off at Rices Outdoor
Market. While walking through the aisles, I overheard a news bulletin
on the radio, which prompted me to ask a vendor to please repeat what I
thought I heard. ``A plane hit the World Trade Center''. I remember
saying, ``My husband works there'' and noticed her horrified
expression. I proceeded immediately to my car to phone my husband.
Unsuccessful in my attempt I went home and tried again to reach him, to
no avail. I called work and explained that I would be in as soon as I
heard from my husband. I next put on the television in our family room
with the phone by my side and witnessed the second plane hit the south
tower, saw both towers crumble and watched in disbelief as the horrors
of that infamous day unfolded.
After speaking to our three children; Meredith (23) at work in
Philadelphia, Jordan (21) at school at the University of Delaware and
Darren (18) at Penn State, our older two children came directly home to
be with me and await revelations.
While dealing with the confusion and shock of what was transpiring,
we held out hope for a miracle, not unlike five thousand other
families. We frantically took turns calling hospitals, radio and
television stations, co-workers of my husband and researched the
Internet to obtain information. In our desperation, we filed a
``missing person's'' report with the F.B.I. and notified New York State
and local police departments. We submitted dental records and D.N.A.
samples to the authorities. We created ``missing'' posters, which
family members placed around New York and on the Internet, asking for
any information on my husband's status.
After three weeks of being in shock and frozen at home, the status
of the missing persons from ``ground zero'' changed from ``missing'' to
``missing, presumed dead''. It was at this time that I realized I had
to address the extensive amount of mail that was thrown in a box since
September 11th. As my husband customarily handled the mundane chore of
family maintenance, I was both inexperienced and overwhelmed by the
enormity of the task. In my attempt to manage our affairs, I forwarded
a letter to all creditors explaining my situation, asking for
consideration and extensions, if possible, without penalties.
As my children attempted to resume life, I continued at home by
following all leads for assistance by calling any number which would
appear in the newspapers, on C.N.N. and M.S.N.B.C. and any referrals
offered to me.
On Saturday, October 6th at 7:30 a.m. I left the house for the
first time since September 11th with an advocate from N.O.V.A. who
picked up my family for a trip to New York. She took us on an
appointment to the N.J. Family Assistance Center and ``ground zero''.
After the site visit, I left our three children at the family center in
the company of volunteer ``companions'', because I didn't want to
subject them to the continuing pain of retelling our story, explaining
our financial status or be subjected to asking for ``hand-outs''. I
visited the trailers with advocates who assisted me in navigating
through the maze of services, charities and organizations that
potentially we could qualify for, along with addressing the legal
necessities. We returned home at 11:30 p.m.
As my husband was the sole supporter of our family and kept all
records on his computer, I attempted to reconstruct documentation to
satisfy all obligations and handle accessing benefits by myself in
order not to incur additional expenses. As the majority of creditors
have shown some compassion, I have also had to deal with dunning
notices and threats to incur additional collection activities.
During this time, I have felt supported and been deeply moved by
family, friends, neighbors, community members and total strangers. I
was especially touched by an organization at the N.J. Family Assistance
Center, a Taiwan Buddhist Compassion Relief Organization (Tzu Chi
Foundation, USA), who donated $1000 to my family on the spot.
Additionally, Penn State University donated a scholarship for Darren, a
freshman at their Altoona campus. Another act of kindness shown to us
was by the ``Count Your Blessings'' fund, established by a Bucks County
builder, C. W. Schrenck, who offered to pay a semester's tuition for my
older son.
After thirty-two years of a happy and successful marriage, I'm
struggling to adjust to my new life situation, both emotionally and
financially. By sharing my personal experience with this committee, I
hope it's beneficial to your investigation.
I have requested that Robert Baldi assist me in sharing specific
information regarding details of all donations.
Mr. Greenwood. Thank you, Mrs. Steiner.
Mr. Baldi, you are recognized to add additional remarks.
Mr. Baldi. Thank you, Mr. Chairman. I have some statements
that I prepared in writing, and I will try to go through them
quickly because I don't want to take up too much of your time.
It was my understanding that you wanted very specific
information in terms of the process that a victim would go
through in trying to get help from charitable organizations, so
I met with Mrs. Steiner and tried to gather this information
for you.
First of all, my name is Robert Baldi, and I am a lawyer
who has had the honor of representing both William Steiner and
Russa Steiner prior to the tragic events of September 11, 2001.
I am here today not as Russa Steiner's lawyer, but as a
spokesperson whose purpose is to help provide you with
information concerning the impact that the terrorist attack had
on her life. She has asked me to speak because she still finds
it difficult to discuss many of the events that are relevant to
your investigation.
Russa and her family live in a community located close to
Philadelphia. Some people would consider it a bedroom community
of New York City. Many people commute from Bucks County to New
York City. She and her husband Bill have been married 32 years
at the time of his death. He was a successful executive with
Marsh, Inc., a large insurance company with offices located on
the floors 93 through 99 of the Twin Towers at the World Trade
Center.
The first terrorist attack hit close to the 90th floor in
the North Tower. For obvious reasons, nothing has been
recovered associated with Bill, not a shred of DNA nor any
personal effects. From what we can tell, most of Bill's
personal records were destroyed. Bill kept a lot of information
on his laptop computer, which he took to and from the office.
Russa has tried to gather information to help her get through
this time.
Because Bill was a successful businessman, the children
were able to afford the college of their choice. The Steiners
have been paying the entire cost of the education for each of
their children. Because of Bill's income tax bracket, the
children were not entitled to any financial assistance, and,
therefore, the full tuition was being paid by the Steiners.
Their older daughter is a graduate--recent graduate of
college. She is living with Russa and had been planning to go
to law school. Bill and Russa were planning to pay her tuition.
In fact, they told her that would be her gift when she
graduated from college. Jordan is 21 years old and a senior at
the University of Delaware, and Darren is a freshman at Penn
State.
If you try to calculate the tuition that the Steiners paid
in after-tax dollars, you can begin to appreciate the
responsibility that Bill Steiner was carrying with him every
day he went to New York.
Russa's financial future is now fragile and uncertain. She
has had to seek the assistance of others, a situation which
makes her extremely uncomfortable even today as we present this
testimony to you. When the status of Bill went from missing to
missing and presumed dead, Russa realized that bills had to be
paid and then began the process of taking over the management
of the family's finances, a task previously performed by Bill.
As she mentioned, she wrote letters to creditors and got
extensions of time. Neighbors and friends gave her newspaper
articles and information that they came across to help her
locate charitable organizations which would be able to provide
her with assistance. There is an agency in Bucks County known
as NOVA. This agency has appointed an advocate by the name of
Mia Alan to help Russa.
Russa has spent many, many hours writing letters and making
phone calls to various agencies. I have provided copies of some
documents with some written material giving you some idea of
some of the things she was doing. But to give you a sense of
what the victim goes through, on October 6, 2001, Russa spent
the day visiting Ground Zero. She was there with other victims'
families. An advocate took her on that same day to trailers
which are located on Liberty State Park, which were set up to
help people such as Russa Steiner. She was escorted from
trailer to trailer where she would wait in line to talk to
someone to schedule an appointment. She then went to the next
trailer to wait in line to schedule another appointment and
ultimately returned to the various trailers at the appointed
time to meet with representatives to tell and retell the story
over and over gain.
One of the trailers was sponsored by a Buddhist compassion
relief fund known as the Tzu Chi Foundation. Russa knew nothing
about this organization; however, when she went and told them
her story, they issued her a check on the spot for $1,000. This
money was available to her immediately, no strings attached. I
have supplied you with a copy of a letter which identifies the
organization.
Russa also spent many hours visiting other trailers. Some
of them were charitable organizations, some of them were
government agencies. She went to the Salvation Army trailer,
and she was told she would receive a holiday meal. We assume
that at some point in the future someone will contact her from
the Salvation Army to provide her family with a meal over one
of the upcoming holidays.
She went and visited the Red Cross trailer. She brought
with her copies of bills. She had contacted the Red Cross
previous to this to apply for the emergency family gift. She
received a case identification number for that specific
application. Separate and apart from that application that
Russa had made by telephone, when she arrived in New York, her
advocator told her to bring with her actual bills to be
considered by the Red Cross. When she arrived on this day, she
brought with her about 20 bills. The representative went
through the bills and selected certain ones that the Red Cross
agreed to pay. A separate disbursement order was then issued
for each separate item selected by the Red Cross
representative. Russa was then provided the disbursement order
to be used as if it were a check to pay the specific bills.
I provided copies of the disbursement orders, which have
been added as an exhibit to this statement. For your
information, the Red Cross on that day provided the following
disbursements to her in response to the 20 some bills that she
gave them. They gave her a disbursement order for $60 for a
trash bill for services in Bucks County. You pay for your trash
personally. And this was for about a 3-month period. They gave
her $227.50 for an electric bill for the month of September.
They gave her a disbursement order for $99.07 for one of the
phone bills. She had several bills and they picked out one of
them and gave her a disbursement order of whatever the name of
the phone company was. They gave her a disbursement order for
$138 for the security company who had just recently repaired
the burglar system in her home. They provided her with two
separate disbursement orders made payable to a local grocery
store in the amount of $135 each and gave her another
disbursement form which advised her they would be sending her
$450 at a later time. Several days later, she received a check
in the amount of $450, which was then for her to use for family
maintenance.
Now, up until--and I say this, by the way--this information
is being provided to you to give you facts and information. I
offer this to you in a neutral fashion. I am just telling you
the manner in which it came through to us. The total sum
received from the Red Cross up until this morning had been
$1,244.57. This afternoon, shortly before this hearing, Russa
Steiner was presented with a check in the amount of $27,507.12,
which I understand is the cash gift, which was in response to
the application that I referred to that she had made earlier.
In a document that I have provided to you was a list of
charities contacted. I supplied to you the date that she
originally contacted the charity and the response. This
particular response of the $27,000 is not on that because we
received that this afternoon, but she is very grateful and
wishes to thank the Red Cross for that and appreciates it very
much.
She was told--and I think it becomes important just to put
things in perspective, again, as a way of information-
gathering--by a representative from the Red Cross that because
she was able to obtain additional time from her creditors, they
did not feel that her personal situation at that time was an
emergency, and therefore she did not require funds on an
emergency basis.
Russa had made many applications to organizations over the
phone and by letters. One of the organizations is her local
United Way. On September 28, 2001, she applied by phone to the
New York City United Way September 11 Fund. On November 2,
2001, that was last Friday, a representative from her local
Bucks County United Way arrived at her house and presented her
a check in the amount of $1,500 from the local United Way. Now,
I was coincidently in the office when this arrived, and as I
understand it--and this is the information that he provided to
me--he did not have any idea that she was coming to testify
here today, and we did not tell him that she was about to.
The gift from the local United Way was unprecedented.
Normally the local United Way only provides assistance to
agencies. The gentleman who delivered the check to Russa
explained that the Bucks County local United Way is applying to
or applying for the victims of--let me stop and explain. There
are about 20 individuals identified in Bucks County, residents
of Bucks County, who died in this tragedy. There may be more,
but so far that is the number that the United Way is aware of.
They are applying, we are told, for funds from the September 11
Fund. He explained that the September 11 Fund is the fund
raised by the United Way of New York. It is our understanding
that these funds will be distributed to the local United Way
organizations. He advised me that 20 families were identified
from Bucks County, and that they made a request for an initial
grant, which, if they receive it, would provide Russa Steiner
with $3,000 per month for 3 months. The $1,500 payment that the
local organization has given to her from their own funds would
be part of that ultimate $9,000 grant, if, in fact, they
receive that grant from the other organization.
By no means am I qualified to speak for the local United
Way in terms of what their intent is or in terms of what their
efforts have been. The gentleman who brought the check to Russa
was very kind and gracious. The funds being provided to her
were unrestricted. We have no information which tells us when
or if the full $9,000 grant would be approved, and we have no
information to suggest if there would be any more money that
would be distributed to her.
Russa has contacted many potential sources of aid. She
promptly called the Families of Freedom Scholarship Foundation
after hearing President Clinton and Senator Dole talk about the
fund on television. She called September 29, 2001, to register
her children. They called her back on October 5 and explained
that the application would be sent out sometime close to the
end of the year.
However, no money would be available for this year, and
ultimately it would be based on financial need. This has been a
very painful process for Russa and her family. People have been
very kind. However, the Steiner family financial situation
remains fragile. As she mentioned, Penn State was kind enough
to provide a $2,500 scholarship for the one young man who is in
Penn State. Congressman Greenwood connected Russa Steiner with
a local builder who raises money for charitable organizations.
They have an organization they call Count Your Blessings. Micky
and Margery Shrank, the creators of the foundation, have told
Russa that they are going to pay one semester's tuition for one
of the children at the school. Congressman Greenwood asked that
she contact them. She faxed information to them, and they
called back immediately and said that they were going to
provide that support.
She and her family have monthly mortgage payments which
have to be met. Though her mortgage company has given her a 6-
months' reprieve while she tries to straighten out the
finances, she will ultimately have to meet these financial
obligations, or she and her children will have to remove
themselves from their home where their children have been
raised and where, of course, their closest connection to Bill
remains.
Today--up until today, the money she has received from
charitable organizations are as follows: The initial payment
from Red Cross in the amount of $1,244.57, the payment made--or
that contribution made by Red Cross today in the amount of
$27,507. The United Way has provided her with $1,500, and the
Tzu Chi Foundation has provided $1,000. The Count Your
Blessings Tuition Fund has agreed to pay a semester for Russa
Steiner.
Thank you.
[The prepared statement of Robert O. Baldi follows:]
Prepared Statement of Robert O. Baldi, Esquire on Behalf of Russa
Steiner
Good afternoon, my name is Robert Baldi. I am a lawyer who has had
the honor of representing both William Steiner and Russa Steiner, prior
to the tragic events of September 11, 2001. I am here today, not as
Russa Steiner's lawyer, but as a spokesperson whose purpose is to help
her provide you with information concerning the impact the terrorist
attack had on her life. She has asked me to speak because, she still
finds it difficult to discuss many of the events which are relevant to
your investigation. I have agreed to help her provide you with some of
the details.
Russa Steiner and her family live in a pleasant community located
close to Philadelphia. She and Bill had been married 32 years at the
time of his death. He was a successful executive with Marsh, Inc., a
large insurance company with offices located on floors 93 through 99 of
the Twin Towers at the World Trade Center. The first terrorist attack
hit close to the 90th floor of the North Tower. For obvious reasons,
nothing has been recovered associated with Bill. Not a shred of DNA,
nor any personal effects. From what we can tell, most of Bill's
personal records were destroyed. Bill kept a lot of information on his
lap top computer, which he took to and from the office.
Because Bill was a successful businessman, their children were able
to afford to go the college of their choice. The Steiners have been
paying the entire cost of the education for each of their children.
Because of Bill's income tax bracket, the children were not entitled to
any financial assistance and therefore, the full tuition was being paid
by the Steiners. Meredith, their oldest daughter, is 23, a graduate of
the University of Delaware. She is living home and was planning to go
to law school. Bill and Russa were planning to pay her tuition. Jordan,
is 21 years old and a senior at the University of Delaware. Darren is
18 years old and a freshman at Penn State. If you calculate the tuition
that the Steiners paid in after-tax dollars, you can begin to
appreciate the responsibility Bill Steiner was carrying with him
everyday he went into New York. Russa's financial future is now fragile
and uncertain. She has reluctantly had to seek the assistance of
others; a situation which makes her extremely uncomfortable.
Since Bill's death, Russa spent most of her time, sitting at home
looking at the television set watching news reports, as events have
unfolded. When the status of Bill went from ``missing'' to ``missing
and presumed dead'', she realized that bills had to be paid and then
began the process of taking over the management of the family's
finances, a task previously performed solely by Bill. She wrote to her
creditors and asked them for extensions of time while she tried to
straighten things out. She copied down telephone numbers shown on
television, advising her of sources of assistance. Neighbor's and
friends gave her newspaper articles and information that they came
across. Ultimately, the local Network of Victim Assistance Agency,
known as NOVA, provided her with a wonderful advocate by the name of
Mia Alan. Mia has helped her with this process. Russa has spent many,
many hours, writing letters and making phone calls to various agencies
searching for assistance for her family.
On October 6, 2001, Russa spent the day visiting Ground Zero with
other victims' families and then an advocate took her to trailers
located on Liberty Island, which have been set up to help victims of
this horrible tragedy.
She was escorted from trailer to trailer where she would wait in
line to talk to someone to schedule an appointment. She then went to
the next trailer to wait in line to schedule another appointment and
ultimately, return to the various trailers at the appointed time to
meet with representatives to tell and retell her story. One of the
trailers was sponsored by a Buddhist Compassion Relief Fund known as
the Tzu Chi Foundation, USA. Russa knew nothing about this
organization, however, when she told them her story, they issued a
check to her in the amount of $1,000.00. This money was available to
her immediately, no strings attached. We have supplied a copy of the
letter that was given to her by this most generous organization, along
with their check. On October 6, 2001, Russa visited many other
trailers, some of them were charitable organizations, others were
government agencies.
Russa went into the Salvation Army trailer. She was told that she
would receive a holiday meal. We assume that at some point in the
future, someone will contact her from the Salvation Army to provide her
family with a meal over one of the upcoming holidays.
While visiting the trailers, she was able to submit an application
to the New York State Victim's of Crime Compensation Board, as well as
the New York State Worker's Compensation Board. Approximately one week
later both of the State agencies contacted her, each advising that she
qualified for State Funds.
When she visited the Red Cross trailer she brought with her copies
of actual outstanding bills. She had contacted them previously to apply
for the Emergency Family Gift and received a case identification number
for that specific application. Her advocate told her to bring actual
bills for consideration by the Red Cross for emergency vouchers. This
request was separate from her first phone application. The
representative onsite at the trailer from the Red Cross, reviewed the
bills and selected certain ones that they agreed to pay. A separate
disbursement order was then issued for each separate item. Russa was
then provided the disbursement order to be used as if it were a check,
to pay the specific bills. Copies of the disbursement orders have been
provided as an exhibit to this statement. The Red Cross has provided
her the following disbursements:
1. $60.00 for a trash bill for services 10/1/01-12/31/01--this is the
cost for her to have her trash picked up at her house.
2. $227.50 for the Steiners' electric bill for the month of September
3. $99.07 for the Steiners' telephone bill for 9/15/01-10/14/01. The
Steiners have several different phone bills. The Red Cross
picked one of the monthly bills and issued the disbursement
order.
4. $138.00 for the Security company that provides a security service
for the burglar alarm system in the Steiner house.
5. $135.00 and $135.00 (two separate disbursement orders) for food made
payable to the Giant, Russa's local grocery store.
6. Several days later, a check arrived in the mail from the Red Cross
to Russa in the amount of $450.00. This money was made payable
to Russa to use at she deemed fit for family maintenance.
The total sum received from Red Cross to date is $1,244.57.
Russa was led to believe that there may be some additional money
coming from the Red Cross from her phone application of September 28,
2001, for the Emergency Family Gift. There has been no suggestion of
the amount or when it will come. A representative said to her that
because she was able to obtain additional time from her creditors, they
felt that she did not qualify for assistance on an emergency basis.
Russa has made many applications to organizations over the phone
and by letters. One of those organizations is her Local United Way. On
September 28, 2001, she applied by phone to the New York City United
Way September 11th Fund. On November 2, 2001 a representative from her
local Bucks County United Way arrived at her house and presented her a
check in the amount $1,500.00 from the local United Way. This gift from
the local United Way was unprecedented. Normally, the local United Way
only provides assistance to agencies. The representative explained that
the Bucks County Local United Way is applying for money, for victims of
Bucks County, from the September 11th Fund. He explained to us that the
September 11th Fund is the fund raised by United Way of New York. It is
our understanding that these funds will be distributed through the
local United Way Organizations. I have been advised that 20 families
have been identified from Bucks County. An initial grant has been
requested which would pay to the Steiners a grant of $3,000.00 per
month for 3 months. The $1,500.00 payment, just recently received,
would represent a portion of the grant which has been applied for. By
no means am I qualified to speak for the local United Way, in terms of
what their intent is or in terms of what their efforts have been. The
gentlemen who brought the check to Russa was very kind and gracious.
The funds being provided to her were unrestricted. We have no
information which would suggest when she will know if the full
$9,000.00 grant was approved, or if and/or when there will be any
consideration for providing her with additional money over and beyond
the outstanding request for $9,000.00.
Russa has contacted many potential sources of aid. She promptly
called the Families of Freedom Scholarship Foundation after hearing
President Clinton and Senator Dole talk about the Fund on television.
She called September 29, 2001 to register her children. They called her
back on October 5, 2001 and explained that the application would be
sent out sometime close to the end of this year. No money would be
available this year and ultimately, it would be based on financial
need.
This has been a very painful process for Russa and her family.
People have been very kind, however, the Steiner family financial
situation remains fragile. Penn State was gracious enough to provide a
$2,500.00 scholarship for Darren. Congressman Greenwood connected Russa
Steiner with a local builder, whose family has created a Foundation
called ``Count Your Blessings'' tuition fund. Mickey and Marjorie
Schrenk, the creators of the Foundation are arranging to pay a
semester's tuition for Jordan at the University of Delaware.
Nonetheless, the children's educational future is uncertain. Russa's
ability to remain in her house is uncertain. She has monthly mortgage
payments which have to be met. The mortgage company has given her a 6
month reprieve while she tries to straighten out finances. She will
ultimately have to meet those financial obligations, or she and her 3
children will have to move from the home where her children have been
raised, and where their closest connection to Bill remains.
By no means do I offer this comment in a judgmental way, but I
would simply state that Russa's financial position right now is
precarious. Russa has never had to ask people for assistance. Russa
would never say to someone, that she needs financial help on an
emergency basis. Nonetheless, part of the trauma associated with this
horrible tragedy is not only the loss of her dear husband, but the
financial uncertainty which now plagues the Steiner Family. To date she
has received the following financial assistance from the following
charities:
------------------------------------------------------------------------
------------------------------------------------------------------------
Red Cross...................................... $1,244.57
United Way..................................... $1,500.00
Tzu Chi Foundation............................. $1,000.00
Count Your Blessings Tuition Fund.............. 1 semester of tuition
------------------------------------------------------------------------
We will be happy to try and answer any questions that you may have
for us.
LIST OF CHARITIES CONTACTED BY RUSSA STEINER
1. Red Cross
Russa Steiner applied over the phone on September 28, 2001 for what
she was told was the ``emergency family gift''. She was assigned a case
number and she immediately faxed her family expenses for their
consideration. She has not received any response to date with respect
to this request.
On October 6, 2001, she applied in person for disbursement orders
with the help of her advocate. She received $794.57 in disbursement
orders on October 6, 2001. Several days later she received a check from
the Red Cross for family maintenance in the amount of $450.00.
Total sum received from the Red Cross to date: $1,244.57
2. Tzu Chi Foundation
Russa Steiner applied in person at a trailer located at the New
Jersey Family Assistance Center on Liberty Island. She received a check
in the amount of $1,000.00
Total sum received from the Tzu Chi Foundation: $1,000.00
3. United Way
Russa Steiner applied over the phone for a United Way grant from
the September 11th Fund on September 28, 2001.
On November 2, 2001 a check in the amount of $1,500.00 was
delivered to her from the Local United Way. The Local United Way has
applied for additional funds from the New York United Way-September
11th Fund.
Total sum received from the Local United Way: $1,500.00
4. Salvation Army
Russa Steiner applied in person at a trailer located in Liberty
Island on October 6, 2001. She was told that she would be provided with
a holiday meal at some time in the future.
5. New Jersey Realtor's Housing Relief Fund
Russa Steiner applied in person on October 6, 2001 at a trailer
located at Liberty Island. During a follow-up phone call on October 15,
2001 she was told that they would forward her request to the National
Branch in Chicago, because they only cover New York and New Jersey. She
has heard nothing further from them.
6. Families of Freedom Scholarship Foundation
Russa Steiner called this foundation on September 29, 2001 after
hearing Senator Dole and President Clinton discuss it on the
television. She received a telephone call back October 5, 2001 advising
her that applications would be sent at the end of the year. She was
told that there would be no money available for this year and that
future grants would be based on financial need.
7. Twin Tower Fund
Russa Steiner learned of this fund from television and made a
telephone call to the organization on September 30, 2001.
8. Sylvan Learning
Russa Steiner applied by phone on September 28, 2001. She received
a telephone call back on October 5, 2001. They suggested that she
contact the Families of Freedom Scholarship Foundation.
9. Count Your Blessings Tuition Fund
This is a foundation created by Mickey and Marjorie Schrenck. At
the suggestion of Congressman Greenwood, Russa Steiner applied October
29, 2001. She heard back the same day that they would be providing one
semester tuition payment for one of the children.
Mr. Greenwood. Thank you, Mr. Baldi.
Mrs. McLaughlin?
TESTIMONY OF ELIZABETH McLAUGHLIN
Mrs. McLaughlin. Thank you, Chairman Greenwood and the
subcommittee, for inviting me here today. Honestly, I feel an
awesome sense of responsibility to the nearly 4,700 families
whose loved ones died on September 11. I think it is important
that this committee and the millions of generous contributors
across America know the unnecessary, and at times overwhelming,
obstacles the surviving victims face when trying to receive
assistance from the government and charities.
I hope that my testimony and the work of this committee
will aid the victims' families in our efforts and improve upon
the current system.
First and most importantly, I am absolutely amazed at the
outpouring of support and generosity from the American people.
When I drive through New York and elsewhere and I see flags
raised, I feel like they are raised for me. I know if my
husband Rob had died any other way under any other
circumstances, that I would not have this kind of support, and
I would not be here today. Rob was 29 years old, and our only
child Nicholas was 9 months on September 11. We had just moved
into our first home. It was a fixer-upper, and we sank our life
savings into it. Rob worked at Cantor Fitzgerald on the 104th
floor of the North Tower, and like most of the world, I watched
the towers tumble that morning.
The events of September 11 have changed our lives forever,
but now, Mr. Chairman, I am tired, and I want to spend time
with my son. Shortly after the attacks, I saw news reports and
telethons that continuously mentioned the fund-raising efforts
for the families of the victims of September 11. I asked
friends and family to see what funds were available. No one
really had much information, but we were all hopeful that these
organizations would help. Rob was the sole source of income for
our family, and I thought for the first time maybe I can keep
my house. But then the real work began. You have to really
focus, which some days is very hard to do, to satisfy the
various registration requirements, qualifying criteria, keep up
with policy changes, find out what groups sent money where,
determine what documents need to be sent and to whom, speak to
uninformed representatives and volunteers, repeat my story to
the same organizations, sometimes 4, 5 and 6 times, countless
faxings, sending e-mails and traveling in person, at least once
a week, to reapply to the same organizations.
Before when I had friends and family helping me full-time,
the task did not seem so daunting. We have contacted over 40
organizations. I have received some emergency funds. I have a
different experience from Russa, and I thought I was doing
everything right. I have an 18-page spreadsheet on all the
charities and government organizations that we started on
September 12, and it is updated every day. It has registration
information, contacts, documentation required, follow-up
required, but now as time goes on and my friends have less time
to devote to this effort, the responsibility and pressure
increased as my bills mount.
Ironically, I have a master's degree in not-for-profit
management. I do understand the magnitude of this project for
charitable groups is unprecedented. I appreciate the work they
are doing for me and for thousands of other families. And I do
think my situation could have been worse. But I don't think
contributors to the various September 11 funds thought that
their donations would be caught up in so much red tape and
become such a source of frustration for the families. It seems
this process could have been better streamlined and centralized
so that families can move on with their lives.
That is why I am here today. It is not too late. Mayor
Guiliani and the city of New York very quickly set up the
Family Assistance Center in Manhattan, Pier 94. They gathered
the charities, government organizations, legal assistance,
translators, volunteers, food, counseling. Why then haven't
these charities been able to get together and agree on one
uniform application? Why haven't they been able to get together
and develop a quicker way for families to receive these funds?
We all have the missing person's reports, death certificates
and any other proof needed to avoid fraud, but the charities
are not sharing these documents or information with each other.
The system is not believing--it is not working the way I
believe it was intended. I know a family in my town of four
children who lost their father on September 11. Their mother
has to support all of these children now, both emotionally and
financially. How can she spend each day making these phone
calls, visiting these organizations and following up? Many
charities are giving out funds on a first-come, first-served
basis. Does that mean she will not receive the donations that
she and her family will need?
Sadly, a friend of mine whose husband worked also at Cantor
Fitzgerald who was 6 months pregnant told me yesterday morning,
I give up. And that is one of the reasons I came today. I don't
want to let her down, and you should not either. There are too
many people who need help, and I think that is why these
charities were set up in the first place.
Mr. Chairman, the American people have shown time and again
that they are kind and generous. Because of the unspeakable
tragedy to my family on September 11, I now am forever grateful
to be experiencing firsthand this kindness and generosity, but
as I testified, it has not been easy, and many people are not
getting the help they need. I sincerely hope this committee
will do everything it can to help the thousands of families
suffering across this Nation more quickly and more easily
receive the generosity that millions of Americans intended they
receive. Thank you.
As I said--sorry--I have several different experiences and
information that I would be happy to submit. I didn't decide to
do this until about 11 o'clock last night. So I don't have--I
am not quite as organized. But thank you.
[The prepared statement of Elizabeth McLaughlin follows:]
Prepared Statement of Elizabeth McLaughlin
Mr. Chairman. Members of the Subcommittee. My name is Elizabeth
McLaughlin. Thank you Chairman Greenwood and the Subcommittee for
inviting me to speak at this hearing today. Honestly, I feel an awesome
sense of responsibility to the nearly 4,700 families whose loved ones
died on September 11th. I think it is important that this Committee and
the millions of generous contributors across America know the
unnecessary--and, at times, overwhelming--obstacles the surviving
victims face when trying to receive assistance from the government and
charities. I hope that my testimony and the work of this committee will
aid the victims' families in our efforts and improve upon the current
system.
And, I think--with all due respect to their fine team--that the
Arizona Diamondbacks should have thrown the World Series for New York.
First and most importantly, I am absolutely amazed at the
outpouring of support and generosity from the American people. When I
drive through New York and elsewhere and I see American flags raised, I
feel like those flags are raised for me. I know if my husband Rob had
died under any other circumstances, I would not have this additional
level of support--and be able to be here today.
Rob was 29 years old and our only child, Nicholas, was 9 months old
on September 11th. We had just moved into our first home, a fixer upper
where we sank our life's savings. Rob was a partner at Cantor
Fitzgerald on the 104th floor. Like most of the world, I watched the
World Trade Center towers fall down that morning.
The events of September 11th have changed our lives forever. But
now, Mr. Chairman, I am tired--and I want to spend time with my son.
Shortly after the attacks, I saw news reports and telethons that
continuously mentioned the fund raising efforts for the families of the
victims of September 11th. I asked friends and family to help see what
funds were available. No one really had much information, but we were
all hopeful that these organizations would help.--Rob was the sole
source of income for our family, and I thought, ``Maybe I can keep our
house.''
But then, the real work began. You have to really focus--which some
days is very hard--to satisfy the various registration requirements;
qualifying criteria; keep up with policy changes; find out what groups
sent money where; determine what documents need to be sent and to whom;
speak to uninformed representatives; repeat my story to the same
organization four, five and six times; countless faxing, sending
emails, and traveling in person each week to reapply.
Before, when I had friends and family helping me full-time, the
task did not seem so daunting. We have contacted over 40 organizations.
I have received some emergency funds, and I thought I was doing
everything right. We developed an 18-page spreadsheet to organize the
registration, contacts, proper documentation and required follow-up.
Now, as time goes on and my friends have less time to devote to this
effort, the responsibility and pressure increase as my bills mount.
Ironically, I have a Masters degree in not-for-profit management. I
understand the magnitude of this project for charitable groups is
unprecedented. I appreciate the work they're doing for me and the
thousands of others families. I think my situation could have been
worse. But I don't think contributors to the various September 11th
funds thought that their donations would be caught up in so much red
tape and become a source of frustration to the families. It seems this
process could have been better streamlined and centralized so families
can move on with their lives. That is the main reason I am here today.
It is not too late.
Mayor Guiliani and the city of New York very quickly set up a
family assistance center in Manhattan that gathered the charities,
government organizations, legal assistance, translators, volunteers,
food and counseling. Why then, haven't these charities been able to get
together and agree on a uniform application? Why haven't they been able
to get together and develop a quicker way for families to receive the
funds? We all have missing persons' reports, death certificates, and
any other proof needed to avoid fraud, but the charities are not
sharing these documents or information.
The system is not working the way I believe it was intended. I know
of a family with four children who lost their father on September 11th.
Their mother has to support all of these children both emotionally and
financially now. How can she spend each day making the necessary phone
calls, visits and follow-up to these organizations? Many charities are
giving out funds on a first-come, first-served basis. Does that mean
she will not receive the donations that she and her family need?
Sadly, a friend told me yesterday, ``I give up.''
I don't want to let her down, and you should not let her down
either. There are too many people that need help. Isn't that why these
charities were set up in the first place?
Mr. Chairman, the American people have shown time and time again
that they are kind and generous. Because of the unspeakable tragedy to
my family on September 11th, I now am forever grateful to be
experiencing firsthand this kindness and generosity. But, as I
testified, it has not been easy, and many are not getting the help they
need. I sincerely hope that this Committee will do everything it can to
help the thousands of suffering families across this Nation more
quickly and more easily receive the generosity that millions of
Americans intended they receive.
Thank you. I will happy to answer any questions the Committee may
have.
Mr. Greenwood. Thank you, Mrs. McLaughlin. Thank you for
being here.
And again, Mrs. Steiner and Mrs. McLaughlin, you are
courageous, indeed, to come and be with us this afternoon, and
we will do everything that we can to honor your presence and
your efforts by making sure that the families--the other
families for whom you speak--also are given what they need for
them and for their children to make it through.
Mr. Spitzer, thank you for being here as well and you are
recognized for 5 minutes for your testimony.
TESTIMONY OF HON. ELIOT SPITZER
Mr. Spitzer. Thank you, Mr. Chairman, Congressman Deutsch,
distinguished members of the subcommittee. Thank you for
inviting me to testify here today. The physical and emotional
impacts of the events of September 11 are staggering, as we
have just heard. Several thousand people lost their lives on
that day. Thousands more were wounded, and thousands lost
family members, jobs or homes as a result of this terrible
attack. Virtually all of these individuals will require some
form of temporary or long-term assistance, ranging from medical
care to financial aid, to mental health counseling. As a
result, our response to this tragedy must be guided by a single
focus: addressing the needs of the victims and their families
as promptly and coherently as possible.
The American people have responded to this call by pledging
more than $1.2 billion to the relief effort, and the charities
entrusted with these funds must spend them in a manner that
fulfills the will of the donors. In particular, the donations
made specifically in response to September 11 attacks must be
used exclusively for the benefit of those who have suffered as
a result of those attacks. Moreover, the funds should be
distributed in an equitable manner, ensuring that no victim is
left unassisted.
Indeed, if this singularly important task is not performed
well, then the public will lose faith in the entire not-for-
profit sector. As New York's attorney general, I am charged
with overseeing the charitable organizations that solicit funds
or hold assets in our State, which includes the vast majority
of the charities involved in the relief effort. Most of these
organizations must register with the State and comply with
annual financial reporting requirements. In addition, my office
helps to ensure that the interests of the public are protected
when charitable funds are raised and spent. Nevertheless, the
essence of charity is its voluntary nature.
My office does not and cannot tell the charities how to
spend money, and most Americans probably agree, as I do, that
government should not control this private giving, which is a
uniquely American phenomenon. Very soon after the September 11
disaster, it became clear to me that we needed to improve the
coordination of the terrible response to the tragedy, and I
have been working ever since to achieve that goal. While there
was some initial resistance from some charities, that
resistance has been largely overcome, and my office is now
working cooperatively with many of the charities involved in
this effort.
In particular, my office identified five critical areas
that needed to be addressed: Improving the process for victims;
improving coordination among charities; providing information
to the public; preventing fraud; and addressing long-term
issues. And we have made substantial progress toward achieving
all of these goals. First, as we have heard, we need to make it
easier for victims to learn what relief is available and to
access that aid. Although thousands of victims have already
received aid, others are having difficulty obtaining the relief
they need. Many of these victims are baffled by the process,
which involves submitting a dizzying array of forms and making
daily phone calls to scores of different organizations offering
assistance. We need to address these issues as soon as
possible.
The good news is that the charitable organizers are
responding positively to our efforts. For example, almost 100
charities and other private entities have already provided my
office with detailed information about their programs and
funding criteria, and we have created a public Web site for
this information, www.wtcrelief.info. This Web site helps
victims and their families locate charities that are providing
aid, assists donors in deciding which charities to give money
to and helps charities learn more about their colleagues'
efforts.
In addition, I hope in the near future to develop a
mechanism enabling individual victims and families to use this
Web site to send information about their needs directly to the
listed charities so that those charities can contact them more
promptly.
At the same time, however, we must remember that many
victims and their families do not have computers or are not
proficient in English, and thus any Internet-based assistance
can only fill a part of the existing needs, as a result, with
need to streamline the written application process to the
greatest extent possible. There is no reason why those affected
by the September 11 tragedy must complete dozens of different
applications for dozens of different organizations.
Instead, I have urged the major charities to work together
and develop a single, uniform application available in as many
languages as possible that all organizations will accept. We
must strive to make the application process as easy for the
victims as we possibly can.
A second goal has been encouraging the charities to work
together to expedite the provision of aid, avoid duplication of
services, and ensure fairness in providing relief. With over
200 major charities raising funds for September 11 relief, the
challenge of coordinating will not be an easy undertaking, but
it is an essential one. Fortunately, we are making substantial
progress on this front. Last week, I announced a team of
private firms, including McKinsey & Company, IBM, SilverStream
Software, Qwest Communications and KPMG, that are working pro
bono to create a private, secure listing of the grants that
have been provided to victims and their families. This effort
is modeled on a similar approach developed after the 1995
bombing of the Murrah Federal Building in Oklahoma City. Their
jointly managed data base served a crucial case management
role, helping ensure both the integrity of the process and the
equitable distribution of relief.
Over the past several weeks, many of the largest charitable
organizations, including the American Red Cross, the Salvation
Army, the September 11 Fund, and Safe Horizon, which together
account for approximately 80 percent of the charitable pledges,
have agreed to participate.
My office is in the process of working with the charities
to finalize the details of the data base, which will become an
essential component of the efforts to prevent duplication and
will also help them to reach and serve the broadest range of
victims. I am pushing aggressively to get this data base
created, and Congress similarly should express its desire that
the data base be created quickly and utilized to the fullest
extent possible.
The third critical goal is to ensure that the charities
provide information about the use of the funds that they have
received. Charities can provide assistance to the victims of
the September 11 attacks only because of the long-standing
generosity of the American people. The American people in turn
expect to see that these funds are provided to those in need
promptly and equitably. Services are still being provided to
victims of the Oklahoma City bombing, even though more than 6
years have passed since that tragic event, and so we know that
the needs of the September 11 victims and their families will
continue for many years.
While the charities, therefore, should not spend all of the
money immediately, they still must demonstrate to the American
people that they are fulfilling their charitable mission. I am
thus urging each charity to publicize on a regular basis the
amount of money it has received, detailing how much it has
spent and identifying the purposes for which its funds have
been targeted. My office has volunteered to collect and
aggregate the data and to place it on our Web site so that
updated information is readily available in a central location.
Fourth, we must be vigilant in our efforts to prevent the
diversion of funds from the victims through fraud, waste and
abuse. We have already seen a few instances of individuals
raising funds with little assurance that the money will reach
the victims of the September 11 attacks, and we have even seen
isolated cases of unscrupulous individuals falsely claiming to
be victims of this tragedy. Our responsibility in government
includes the obligation to move swiftly and aggressively to
enforce the laws against those who engage in fraud, and there
are ways that Congress can help. In particular, Congress should
modify those provisions of the Internal Revenue Code that
impede disclosures to State law enforcement authorities
regarding IRS audits and enforcement actions and should
encourage greater disclosure of charitable fund-raising
practices.
Finally, I have called for the creation of a permanent
working group of the major charitable organizations and victim
groups, which can meet on a regular basis to address the needs
of victims who have not been assisted and to solve other
problems in the process as they arise.
A similar working group was created in Oklahoma City and
was extremely helpful in the response to that tragedy.
This kind of focused collaboration is especially crucial
for the retail level charities, which are actually delivering
cash assistance and services to individual beneficiaries. In
addition to addressing the needs of individual victims, the
working group can focus on some of the difficult questions that
all charities are facing, such as balancing the desire to
provide assistance quickly against the need to keep funds in
reserve for the future; deciding how to allocate funds among
the many survivors of a single victim; guarding against the
prospect of individuals who may try to defraud the charities;
and determining how to help undocumented aliens and other
victims who are afraid to come forward.
On balance, the charitable organizations have done an
excellent job in responding to the events of September 11. On
behalf of all of us in New York, I wish to express our
tremendous gratitude to all Americans--to all Americans and
indeed people throughout the world who have contributed to this
remarkable relief effort. Nevertheless, we must recognize the
events of September 11 demand a team response. Only through an
ongoing cooperative effort can we possibly hope to ensure
meaningful and sustained care for the victims of this terrible
tragedy. This cooperation is essential if the charities are to
earn and keep the confidence of the American people. Faith not
only in wise use of the donations raised for this crisis, but
also faith in the integrity of our great tradition of private
philanthropy. Thank you.
[The prepared statement of Eliot Spitzer follows:]
Prepared Statement of Eliot Spitzer, Attorney General, State of New
York
Chairman Greenwood, Congressman Deutsch and distinguished Members
of this Subcommittee, thank you for inviting me to testify before you
today on the important issues that face us in the wake of the September
11th attacks and the charitable outpouring that followed that tragedy.
The physical and emotional impact of the events of September 11th
is staggering. Several thousand people lost their lives at the World
Trade Center, the Pentagon and in Pennsylvania, and so the relief
effort plainly begins with an understanding of the thousands of
grieving families and friends they have left behind. Many children will
grow up without a parent, and thus families may need support for years.
In addition, thousands of people were injured as they fled the
World Trade Center or tried to rescue others. Many will require years
of medical treatment and other assistance. Thousands of others in New
York lost homes, jobs, businesses and sense of security. The individual
and aggregate physical, emotional and economic losses are huge. The
need for services ranging from education and training to mental health
counseling is equally enormous and will endure for years to come.
Our response to this tragedy must be guided by a single overriding
principle--the needs of the victims and their families must be
addressed as promptly and coherently as possible.
The American people have already responded to this call, by opening
their hearts and wallets in an unprecedented way. Charitable
institutions have collected more than $1.1 billion in donations and
pledges, making appeals to their donors that directly cited the need
for relief of this disaster. Collectively, the American public has
great expectations that this outpouring of relief will make a
difference for those who are suffering, both on an immediate basis and
over the long haul.
As a result, the charities that have been entrusted with these
funds must spend them in a manner that fulfills the will of the donors.
In particular, the donations made specifically in response to the
September 11 attacks must be used exclusively for the benefit of those
who have suffered as a result of those attacks. Moreover, the funds
should be distributed in an equitable manner, ensuring that no victim
is left unassisted. Indeed, if this singularly important task is not
performed well--with dignity, fairness, equity and justice for all of
the victims--then the public could lose faith in the entire not-for-
profit sector.
As New York's Attorney General, I am charged with overseeing those
charities that solicit funds in our state, as well as the charitable
organizations, including foundations and charitable trusts, which are
created in or hold assets in our state. It is my duty to help ensure
that the interests of the public are protected when charitable funds
are raised and spent. I consider it a privilege to perform this
important function, especially in this time of great need.
Nevertheless, the essence of charity is its voluntary nature.
Americans decide individually, often in a manner closely linked to our
individual views and faiths, how to make contributions to charities
that serve our shared goals. There are many diverse ways in which
relief can be provided effectively, in keeping with our country's
strong tradition of private philanthropy.
In New York, most not-for-profit groups (other than religious
organizations and certain other exempt entities, such as the Red Cross)
are required to register with the state and comply with annual
financial reporting requirements. My office makes those reports public,
so that donors can make informed choices as they plan their
contributions. We oversee not-for-profit groups, including those that
are exempt from registration and reporting rules, to ensure that they
use their charitable assets in ways that fulfill the intent of the
donors and further the public interest. My office tries to ensure that
charitable solicitations are truthful, that charities invest their
funds carefully and that the officers, directors and trustees who
manage not-for-profit institutions uphold their fiduciary duties to the
beneficiaries of the charities they run.
But my office does not and cannot tell the charities how to spend
money--and most Americans probably agree that government should not
control this private giving process.
As regulators, our goal in general has been to help donors' efforts
to obtain information more easily concerning what each charity has done
and pledges to do with the funds it collects from the public. Here,
with the magnitude of the September 11th tragedy, and the huge numbers
of its victims, we must also pay special attention to helping those
individuals and families obtain the information they need to locate the
assistance they deserve.
Very soon after the disaster, it became clear to me that we needed
a coordinated charitable response, and that we could not afford to wait
for that coordination to evolve over an extended time period. I
therefore have tried to use my office to jump start the necessary
collaboration. While there was some initial resistance from some
charities, that resistance has been largely overcome, and my office is
now working very cooperatively with many of the charities involved in
this effort.
In particular, my office identified five critical areas that needed
to be addressed, and we have made substantial progress toward achieving
all of these goals:
1. making it easier for victims to learn what relief is available, and
to access that aid;
2. creating a victims database, to facilitate coordination, avoid
duplication and ensure fairness in the aid distribution
process;
3. providing the American public with information about the amount of
donations received and expended, and the purposes of those
expenditures;
4. investigating and prosecuting any instances of fraud and abuse that
arise; and
5. ensuring that a working group of charities and victim advocates is
established, to solve problems as they arise and swiftly
identify gaps in the services required to meet victims' needs
in the future.
I will devote the remainder of this testimony to a more detailed
discussion of each of these initiatives.
Victims' Need for Access to Information and Streamlined Process:
The government agencies and charitable organizations that have
stepped in first to meet victims' most immediate and acute needs have
distributed tens of millions of dollars in aid, but already reports of
delays and gaps in service are emerging. Although thousands of victims
have already received aid, many others are still in need. Moreover,
almost all are baffled by the process, which involves a dizzying array
of forms and scores of phone calls, ever-changing assistance personnel,
perceived delays in receiving relief and, as yet, very little
explanation of how to go about accessing relief for longer-term
expenses. These problems are very troubling.
The lack of coordination also affects the charities, particularly
those seeking to support longer-term needs of the victims, which are
finding it difficult to identify the victims they have pledged to
serve. It is certainly reasonable for those charities--as well as
charities whose relief focuses on broader, community-wide losses--to
take additional time to assess the needs, consult with other charities
and develop effective service plans, but that process should be as open
as possible, so that the victims and donors can monitor progress. As
yet, we know very little about the plans for this portion of the
charitable dollars raised.
One of my top priorities has been to bring all of the various
charities together in an effort to address these issues--particularly
the problems faced by the victims--as quickly as possible. The good
news is that the charitable organizations are responding positively to
our efforts. For example, almost 100 charities and other private
entities have already provided my office with detailed information
about their programs and funding criteria, and we have created a public
website for this information: www.wtcrelief.info.
This website--which has been up and running for more than a month--
contains a search function which helps victims and their families
locate those charities that are providing the precise type of
assistance the victims need. Increasingly, as more data is accumulated
each day, this website also includes contact information and other
guidelines, so that victims will find it easier to obtain relief.
The website can also easily be used by donors in deciding which
charities to give money to. Donors can find the charities that are
providing the specific kinds of assistance they wish to support, can
link to those charities' financial reports on an independent website
(www.GuideStar.org), and in many instances can link directly to the
charities' own websites to get more information or donate on-line.
The www.wtcrelief.info website also provides charities with a
vehicle to learn more about their colleagues' efforts, so that they can
work closely with those serving the same goals as their own, and can
identify those needs that may be receiving less attention.
I hope in the near future to work out with the charities a
mechanism enabling individual victims and families to use our
www.wtcrelief.info website to send information about their needs
directly to the listed charities, so that those charities can contact
them more promptly. My goal, which I know the charities share, is to
facilitate outreach by the charities to the victims, especially those
who are frustrated, fearful or otherwise experiencing barriers to
assistance.
We must remember, however, that many victims and their families do
not have computers, or are not proficient in English, or both, and thus
any Internet-based assistance can only fulfill a part of the existing
needs. As a result, we need to streamline the written application
process to the greatest extent possible. Although it is wonderful that
so many organizations are stepping forward to provide assistance, this
outpouring of support can result in confusion and reams of paperwork
for the victims. While many of the victims who lost a close family
member or were injured or displaced by the tragic events of September
11th have completed extensive applications in seeking their initial
emergency relief grants, there is no reason why they must be required
to chase down and complete multitudes of different applications for
dozens of different organizations in order to have their longer-term
needs met.
Instead, I have urged the major charities to take the lead in
developing a single, uniform application--available in as many
languages as possible--that all organizations will accept. We must
strive to make the application process as easy for the victims as we
possibly can.
Importance of a Victims Database to the Charities' Coordination:
With over two hundred charities raising funds for September 11th
relief, the challenge of coordinating this effort began eight weeks ago
and will continue for many years to come. The charitable organizations
that have tapped the reservoir of public generosity so successfully
must now work together as never before to expedite assistance, avoid
duplication of services, prevent fraud and ensure fairness in providing
relief. This will not be an easy undertaking.
That is why I have recruited talented professionals from the
private sector to create a victims database, which can maintain a
private, secure listing of the grants that have been provided to
victims and their families. Just last week, I announced a team of
private firms, all of whom are providing services and products for this
database effort on a pro bono basis. The team is coordinated by
McKinsey & Company, and includes IBM, SilverStream Software, Qwest
Communications and KPMG. I greatly appreciate the willingness of these
entities to assist in this important effort.
My role in the creation of this database has been as a catalyst,
setting forth the parameters and seeking to have the database up and
running as quickly as possible. In particular, the database must
include strict security measures to protect the privacy of the victims
and their families from unauthorized disclosure.
This effort is modeled on a similar effort developed after the 1995
bombing of the Murrah Federal Building in Oklahoma City. I am grateful
to the staff of Oklahoma City's charities, including the United Way and
the Oklahoma City Community Foundation, for sharing their wisdom,
expertise and experience to aid us in developing our database. Despite
the magnitude of the tragedy in Oklahoma City, because most of the
victims worked directly for the government and the number of families
impacted was smaller, the charities could meet around a table on a
regular basis and work through the issues family-by-family. Their
jointly-managed database served a crucial case management role, helping
ensure both the integrity of the process and the equitable distribution
of relief.
In contrast, the scale of the September 11th disaster--with
thousands killed and tens of thousands suffering severe physical,
emotional and economic losses--is much more vast. Our challenge is to
find a way for the charities to work together smoothly and with the
same sense of shared purpose as their Oklahoma City counterparts.
Over the past several weeks, many of the largest charitable
organizations--including the American Red Cross, the Salvation Army,
the September 11th Fund (the joint venture of United Way and the New
York Community Trust) and Safe Horizon, which together account for
approximately 80% of the charitable pledges--have agreed in principle
to participate. These charities have acknowledged the need for the
database, and indeed have expressed a desire to operate it themselves,
rather than having it run by a government entity. It is important to
emphasize, however, that the cooperation of the charities is essential
to the success of the database, because only they have the information
necessary to make it work, and the level of commitment varies among the
many different charitable entities.
My office is still in the process of working with the charities to
finalize the details of the database, which will become an essential
component of their efforts to prevent duplication and fraud, and will
also help them collectively reach and equitably serve the broadest
range of victims. These are very important goals, and as a result I am
pushing aggressively to get this database created as soon as possible.
Congress similarly should make clear that it is demanding a coordinated
response to this tragedy, and should urge the charities to create the
database quickly and utilize it to the fullest extent possible.
Obligation to the American Public:
The charities must recognize that they are only able to provide
assistance because of the overwhelming generosity of the American
people, and that the American people, in turn, expect to see that these
funds are provided to those in need promptly and equitably. There have
been several publicized cases of victims who have not been able to
obtain needed relief, and unfortunately this has overshadowed the fact
that tens of millions of dollars have already been provided to
thousands of individuals.
One of the other lessons of Oklahoma City--where services are still
being provided to victims more than six years after that tragic event--
is that the needs of the victims for services and funds will continue
for many years. This clearly will be true in the aftermath of the
September 11 disaster as well, and thus programs must be carefully
designed and funds prudently managed so they remain available to meet
evolving needs. The charities cannot and should not spend all of the
money immediately. A coordinated process by which the charities account
for their progress will demonstrate that they are fulfilling their
mission and remaining faithful to their public trust.
I am thus also urging each charity to publicize, on a regular
basis, the amount of money it has received, detailing how much it has
spent and identifying the purposes for which its funds have been
targeted. My office has volunteered to collect and aggregate the data,
and to place it on the www.wtcrelief.info website, so that updated
information is readily available to the American people in a central
location. Over the long term, I will work to expedite and improve the
charities' disclosure of their programs, priorities and finances in
other ways, to better inform and empower the donating public.
Vigilance Against Fraud and Abuse:
As if the challenges ahead were not enough, we have seen evidence
of a few individuals whose commitments to charity are questionable at
best. Some of these have sought to raise funds from the public, making
references to September 11th, but with little assurance that the funds
raised will in fact serve that goal. Likewise, a handful of
unscrupulous individuals have falsely claimed a connection to the
tragedy--a supposedly lost loved one, for example--and have sought to
profit from the generosity of an unsuspecting public.
Thankfully, only a trickle of such fraud has emerged thus far. With
the scale of this tragedy and the corresponding scale of the charitable
outpouring, however, we must remain vigilant against fraud and waste if
we are to preserve public confidence in the charities doing the work so
desperately needed.
Our responsibility in government includes the obligation to move
swiftly and aggressively to enforce the laws against those who mislead
the donating public or defraud the charities trying to serve the real
victims here, and there are ways that Congress and the state
legislatures can help.
At the federal level, Congress should modify those provisions of
the Internal Revenue Code that impede disclosures to state law
enforcement authorities regarding IRS audits and enforcement actions,
and should encourage greater disclosure of charitable fundraising
practices. At the state level, I have recommended changes to New York
State law to facilitate enforcement actions against those who engage in
fraudulent charitable solicitations. Our existing law enforcement
tools, together with the legislative and policy changes I have
proposed, will better serve our goal of ensuring truthful solicitation
and trustworthy distribution of funds.
Need for Ongoing Working Group:
Because of the unprecedented scope of the September 11 tragedy, the
process of delivering aid to victims will be long and complex, and many
problems will arise. As a result, I have called for the creation of a
working group of the major charitable organizations and victims groups,
as occurred in Oklahoma City, which can meet on a regular basis to
address these problems as they occur. Indeed, I have been encouraged by
the charities' efforts to develop their own working group during the
past two weeks. This kind of focused collaboration is particularly
crucial for the ``retail'' level charities, which are actually
delivering cash assistance and services to individual beneficiaries.
Such a working group--which must include victim representatives--
will be able to coordinate their relief effort, and discuss the many
thorny issues that all charities are facing. For example, the
charities:
must balance the desire to provide assistance quickly against
the need to keep funds in reserve to cover other future needs;
must decide how to allocate funds among the many ``survivors''
of a single victim, which can include spouses, ex-spouses,
children, grandchildren, domestic partners, parents, siblings
and others;
must also guard against the prospect of individuals who may
try to defraud the charities (and thus defraud the public which
has relied upon them to provide relief and not waste their
donations on the undeserving); and
must determine how to help undocumented aliens and other
victims who are afraid to come forward.
There are no ``right'' answers here but, as the guardian of
charitable assets in New York, I believe that it is essential for the
charities and victims to sit down and coordinate their approach to
these types of major issues. In addition, I believe that all of us--
government officials, charities, victims and their advocates--will
benefit from a structure that can respond quickly when it becomes
evident that a particular victim or category of victims has somehow
been missed by the system and needs immediate help.
On balance, the charitable organizations have done an excellent job
in responding to the events of September 11th. On behalf of all of us
in New York, I wish to express our tremendous gratitude to all of the
Americans, and indeed, people throughout the world, who have
contributed to this remarkable relief effort. However, the charities
must understand the importance of coordinating their response to the
disaster without further delay.
Although each charity involved has its own unique mission, they
must recognize that the events of September 11th demand a team
response. Only through an ongoing cooperative effort can we possibly
hope to ensure meaningful and sustained care for the victims of this
terrible tragedy. This cooperation is essential if the charities are to
earn and keep the confidence of the American people--faith not only in
wise use of the donations raised for this crisis, but also faith in the
integrity of our great tradition of private philanthropy.
Mr. Greenwood. Thank you, General Spitzer. We appreciate
your presence and your testimony.
Dr. Healy, thank you for being with us, and you are
recognized for your testimony.
TESTIMONY OF BERNADINE HEALY
Ms. Healy. Well, it is clear that life in America changed
forever on the morning of September 11. The events were
extraordinary, and we responded in a way actually not seen
since the world wars, and the historical point during the world
wars, the American Red Cross raised in today's dollars in
excess of several billion dollars, the same kind of level of
philanthropy. Immediate and emerging efforts to alleviate the
human suffering brought on by these hard attacks required
activation of most of our lines of service. Disaster relief and
recovery, blood services, international work and our Armed
Forces emergency work. We sought blood, we sought financial
donations, and we recruited volunteers to meet those needs.
Early on and in lockstep with our board, we defined what we
needed to do. We also created an entirely new fund, a separate
fund, the Liberty Fund, as an independent separate segregated
account created wholly to hold and disperse funds for this new
kind of disaster, which clearly still engulfs our Nation today
and surely for tomorrow. The Liberty Fund was borne out of a
strong and immediate recognition that the victims of September
11 were those lost, their families, the relief workers, those
displaced from their homes, and those victims of terrorist
attacks yet to come, such as the anthrax victims.
The victims were also citizens grieving, healing and in
search of preparedness, and our military suddenly called to
serve in a new theatre of war. There is no question that the
immediate response and highest priority, as it always is of the
American Red Cross, is to move in very quickly to assist those
in need at Ground Zero, and we had three Ground Zeros: in New
York, in Pennsylvania and at the Pentagon.
We did our usual disaster kind of work on relief and
recovery at the sites, mainly a kind of social service,
shelter, food, mass care, but we also developed an entirely new
program called the family grant program, a gift to families
like Mrs. Steiner, like Mrs. McLaughlin. We did it immediately,
quickly, and our purpose, even though we only had about $50
million in the bank at the time to cover what we knew was at
least a $200 million effort initially, we said, we are going to
get a family gift program out, get this money out the door, and
we developed a one-page sheet of paper that had to be filled
out and that required no receipts, and I am terribly distressed
about Mrs. Steiner's experience, required no receipts and was
purely based on the need of that family up to roughly $30,000,
with a letter going with that check that said, if you need
more, come back to us.
This was intended for the first 3 months. I do know that
Mrs. McLaughlin told me just before that she was pleased that
she received almost $27,000 from the Red Cross, applying in
September 24, getting her check on September 26, cashed on
October 1. That is the way it was supposed to happen, a quick
turnaround, in this case, within 48 hours. Unfortunately, we
failed Mrs. Steiner, and there is no excuse for that.
Clearly, proper stewardship of the Liberty Funds, when we
are talking about $100 million, $200 million, now $500 million
or more, was one of our highest priorities from the very
beginning. A strict allocation of the money that was raised was
put into the separate account, but also with a very clearly
defined categories of use that were put under the oversight of
a team of external auditors from KPMG, and one of those senior
partners had experience in fraud--was experienced in fraud and
abuse.
Let me address a few issues that have been raised recently
that I think should be clarified. First, the American Red
Cross, to my knowledge, has never described its work as limited
only to those people who were lost on September 11 and their
family, in New York, and Pennsylvania and the Pentagon. We
worked with them vigorously. Everything that we thought we
could do, everything that was within our mission, we did.
Now, other charities have said that, that it is only for
the people who were lost on that day. We heard that background
noise, so we repeatedly communicated to the public our range of
service, through our chapter network, through PSAs, through
contacts with donors, Web sites, in numerous TV appearances,
press releases, in several--in full-page ads in several major
newspapers listing the range of services, how much money we
have raised and what it was being spent for. Very much along
the lines of what Attorney General Spitzer has outlined.
Perhaps not everyone heard it, but we certainly have tried, and
we will continue to try and get that message out.
Another issue that we must clarify is that we have helped
over 25,000 people, and we have not flip-flopped on whether or
not we could put personal information on these people that were
helping, whether it be spiritual or mental health counseling,
whether it be a cash grant, into an open common data base that
could be accessible to numerous other groups, either from
government or from charities. We have delayed participation
because of a long-standing board policy protecting
confidentiality of those victims, of those we helped. And as of
today, that confidentiality policy has not changed. We will
provide names, however, as we have said all along, if the
victims, if the Mrs. Steiners and if the Mrs. McLaughlins, sign
a waiver of confidentiality, which is the same process that we
used in Oklahoma City, or a similar process that we used. You
must have the confidentiality. If someone does not want us to
release the help that we gave them, we will protect them if
they wish us to.
I think the third issue is that from the very first attack,
blood preparedness loomed large. Sadly, because of the high
mortality, significant blood needs did not materialize. We had
already determined, however, we had determined months, if not a
year before, that preparedness for terrorism in this country
requires a strategic blood reserve of frozen O-type blood.
Frozen blood lasts up to 10 years, and such reserves can be
created when you have high levels of blood donations, as we
have seen recently in the wake of September 11.
We moved quickly on a scaled-up freeze program in order to
amass what we hope will be 100,000 units of frozen blood, which
means the next terrorist event will not put the entire medical
system at risk if we suddenly need 50,000 units of blood. We
cannot choose between the victims of a terrorist attack and
those suffering throughout the country in hospitals everywhere.
The blood reserve, the frozen blood reserve will also be
available if it is needed for our military, particularly in the
face of a ground war.
The Liberty Fund is being used for phone banks, 800
numbers, outreach to victims, for auditing costs and for other
functions, but all must be related--again, all expenses
disbursed from this fund must be related to the designated
purposes of the fund, related to September 11 and its
aftermath, preparedness of this country as well.
And those purposes alone, September 11 and its aftermath,
we created separate funds under external auditor scrutiny to
assure that no unrelated disbursements would be made and to
assure that all of our communications on those disbursements
will be accurately reported to the public and to anyone who
wishes to have that information on a moment's notice, including
you, Mr. Chairman.
In summary, our responsibility throughout this horrible
national disaster, one that we have in the American Red Cross
never seen before on our homeland, has been to see that the
resources marshalled are spent wisely and caringly. We
exercised judgment--some people may not agree with some of the
categories of use that we have outlined, but we have experience
in these areas, and exercised our judgment in the best interest
of what we thought was wise and caring stewardship of these
precious resources.
I believe that they have been and will continue to be used
wisely and caringly. This is what the American Red Cross
Liberty Fund is all about.
[The prepared statement of Bernadine Healy follows:]
Prepared Statement of Bernadine Healy, President, American Red Cross
Life in America changed forever on the morning of September 11,
2001. We realized that what has taken place is extraordinary, and the
American Red Cross was called upon to respond in an extraordinary way,
and in a way we had not been called on to serve for many decades. The
immediate and emerging efforts of the American Red Cross to alleviate
human suffering brought on by the attacks of September 11 required
activation of many lines of service--disaster relief and recovery,
blood services, international, armed services emergency services--and
we sought contributions of blood and financial donations to meet those
needs. The generous contributions of blood and money came in for
victims: victims of the opening salvo of this new kind of war, victims
fearing and grieving across America, and victims yet to come.
Early on and in lockstep with the Board we defined those response
requirements and created an entirely new fund, the Liberty Fund, as a
separate and segregated account to hold and disburse funds related to
this ongoing new kind of disaster. Why did we believe it necessary to
establish a new fund? For many reasons. This is a disaster unlike any
other in U.S. history. This is not a ``regional'' disaster; it is not
only about the hideous events that occurred in New York City,
Pennsylvania and at the Pentagon. Rather this is a disaster that
continues to affect our entire nation, at this time and as we look
ahead. This account from the outset has been open to public review. We
want it to stay that way and we believe the American public wants it as
well.
Proper stewardship of the Liberty fund was our highest priority.
Strict allocation of money raised nationally and across the country
into this separate account with clearly defined categories of use was
placed under the oversight of a special team of external auditors,
KPMG. The team included prominently one partner who was skilled in
fraud and forensic auditing. (They also reviewed disbursement methods
for the large cash gift program.) The discrete categories of use of
these funds was articulated in our earliest telephonic meetings with
the Board, fund raising directives throughout our nearly 1100 chapter
and blood units across the country, through personal and written
contacts with major donors, on our fund raising web site, through
PSA's, and numerous TV appearances, press releases, during a press
conference and through full page ads in three major newspapers. Our
activities were communicated in formal and informal meetings with the
United Way and the Salvation Army.
The American Red Cross has come through a time of heroic service to
our country. The outpouring of support by the public has been
unprecedented, and a statement of their support for the work we have
been doing. When one is dependent on contributions for support of that
work, no one ever knows whether the blood or financial donations will
be adequate to meet the task. We believed we needed over 300 million
dollars for our immediate response and have laid out details for that
use. We estimated that roughly 200 million dollars would likely be
needed over the next year to eighteen months beyond that to prepare the
organization for readiness for an ongoing new kind of war. Those
investments--in volunteer mobilization, chapter development for
response to weapons of mass destruction, expanded blood security, and
continuity of operations efforts--are still under discussion. Also, we
have not decided as to how large a reserve of funds the Liberty Fund
should hold to assure the same kind of response to another attack that
could involve as many or more victims.
In the world of charitable contributions one never knows how fast
and how large donations will be. I can assure you that the level and
rapidity of contributions has far surpassed any persons imagination.
Already we have 500 million dollars contributed and some additional
pledged. Donations that have been specifically pledged for families,
for blood, for help with international victims, or for other uses have
been applied accordingly.
Donors must be fully aware of the work of the organization they
donate to and the range of their services, and the challenge for all
charities--service organizations like the Red Cross or grant makers
like United Way--is to find the perfect vehicle so that ever donor
making spontaneous gifts are know the purposes for which their gift
might be used. .
This new kind of war engulfing America that started on 9/11 is
evolving; the responsibilities of the American Red Cross to the
communities we serve is evolving. As long as we keep the public fully
aware of our work to the best of our ability, the trust with the
American pubic will be secure.
National Obligations and Historical Responses:
The American Red Cross draws its authority from a Congressional
charter, functions as an auxiliary to the government in times of great
national calamity, and has defined and broad based responsibilities to
this nation as part of the Federal response plan in times of national
mobilization such as war or weapons of mass destruction preparation and
response at the local and federal level.
In recent time most of our disaster responses have been one
dimensional self-limited responses within the silo of our disaster
operations group. The vast majority of the 60,000 disaster responses
are single family fires within local communities. The large hurricanes
or floods that require a national coordination and a national appeal
are still local disasters with a self limited group of victims and a
definable time line. They virtually never require the mobilization of
other Red Cross established lines of service such as Blood, Armed
Forces Emergency Service, or International services.
The events of September 11th and its aftermath is a true national
disaster with no clear end in sight. The present yet unfolding
bioterrorist attacks on innocent civilians occurring now, and the
reported threats of further biological, explosive, nuclear and chemical
attacks that convulse our TV screens follow that first series of events
of 9/11. Most horrifically, Americans wherever they live face an
uncertainty and vulnerability that was simply not perceived as real two
months ago. In this context, the American Red Cross under its mission
draws heavy responsibility.
Many have described the attacks on the World Trade Center, the
Pentagon and the downing of an airplane in Pennsylvania as the opening
battle in a new kind of war. For us, our response today does more
closely mimics our responses during World War 1 and World War II .
During those times our American Red Cross mobilization also involved
multiple lines of service at both the local and national level. We
oversaw major volunteer mobilization of nurses to serve in the theaters
of war, nurses and health aids visiting families at home; physiatrists,
ambulance drivers, and family assistance workers. We carried out
extensive armed forces emergency services, and worked internationally
with our allies and civilian populations displaced or harmed by battle.
In World War II we also took on the vital and new effort of
providing blood services, blood drawn from American volunteers which
was sent overseas for our own military those of our allies (``Blood for
Britain'' program). We served as part of America's civil defense effort
and almost every family had a Red Cross volunteer. Fund raising during
that time was the largest in the history of any charitable organization
and in today's dollars exceeded several billions of dollars.
The Liberty Fund in support of September 11th and its aftermath:
The Liberty fund was borne out of a strong and immediate
recognition that the victims of 9/11 were those lost, their families,
the relief workers, those displaced from their homes, and those victims
of terrorist attacks yet to come. The victims were citizens grieving
and healing and in search of preparedness. The victims were our
military and their families suddenly called to serve in a new theater
of war.
Immediate Disaster Response
Our first priority was to the immediate disaster response in three
different cities; and that work continues. Early on we estimated that
we needed at least $200 million to meet those obligations to victims
and their families and made commitments before even a quarter of that
amount was in hand. As it turns we have already carried out the largest
response we have ever made directly to victims in the recent history of
the organization, with over 120 million dollars of the 200 million
estimated already spent or in process.
Our response also included emotional and spiritual counseling
contacts that exceeded 100,000 carried out by thousands of volunteers;
over 10 million meals and snacks; manning respite centers for rescue
workers and compassion centers for social service support for the
grieving families. Ground zero labor included help with evacuation and
mass care. Early on we developed program to get cash gifts quickly into
the hands of families who had just lost breadwinners and who confronted
cash flow short falls. These gifts, on behalf of the American people,
are intended to tide families through until other resources such as
life insurance or longer term assistance would become available.
So far more than 25,000 people have received some kind of help,
and. the work continues. Our relief efforts extend to victims of
anthrax, and must be there as well to others who might suffer in the
uncertain time ahead. The latter costs which are not factored in the
200 million dollars should be covered by reserves in the Liberty fund
after other designated distributions are made.
Blood Services
Blood service and preparedness is another vital responsibility of
the American Red Cross that has been challenged by the unfolding events
of 9/11. For over a year we had been developing plans for our response
to weapons of mass destruction attack, attacks which we had previously
designated the ``disasters of tomorrow''
In our planning for response to a WMD attack we determined that we
would need a strategic reserve of frozen blood, the universal O type,
screened and tested and available for transfusion within a matter of
hours. Frozen blood is good for ten years, and can be stored at depots
throughout the country. After the 9/11 terrorist attacks, we not only
positioned existing blood products near the attack sites, but also
responded to the thousands of additional volunteers that came forward
to give blood donations--even when they knew that there were almost no
survivors who needed it. In the long waiting lines we suggested a
return at a later time but most wanted to give then. They did it to
``do something'' and they did it for needs of tomorrow. Working closely
with the FDA we quickly scaled up our plans to freeze the extra O blood
which was now becoming available to be ready for the period of
uncertainty in which other WMD events were being threatened.
During peacetime our inventory of blood is razor thin: on average 2
days, roughly 40,000 units. This level so quickly fluctuates that it is
not even adequate for peace time. I can assure you such inventory
levels are woefully inadequate in times of uncertainty and this new
kind of war. Were there a sudden need for 50,000 units of blood, our
customary inventory would be more than wiped out--and its diversion
would essentially shut down medical care for the thousands of other
Americans needing blood for elective operations, trauma, cancer
therapy, transplants, chronic anemia, and other life threatening
illnesses.
It takes roughly 2 days or more to obtain, screen and test blood
for use, too late for those who need blood now. We cannot afford for
this nation to face a shortage of ready safe blood as some fear we
might face now with supplies of certain antibiotics or vaccines.
Recovery and Preparedness in our Communities:
American Red Cross work includes preparedness within our
communities: grieving and healing services; information about weapons
of mass destruction, including bioterrorism; and about family
preparedness. To be ready for the uncertainties of weapons of mass
destruction we have to mobilize a new kind of volunteer. This would
include what we have termed the Mercy Battalion of trained medical
personnel skilled and willing to respond under our Federal Response
Plan as auxiliary to the federal government in such settings as
quarantined mass care shelters, immunization settings or caring for
patients in a hospital overflow shelter. Our Armed Forces Emergency
service work has expanded nationally and at the chapter level as
reservists were called up and our troops deployed for a possible ground
war.
In the setting of the huge outpouring of donations for the
September 11th terrorist attacks, it is essential that there be strong
public review. With so many different charities receiving donations for
very specific purposes and in some cases more limited designation than
our Liberty Fund--such as those solely for rescue workers, or those
solely for families of victims or for college scholarship programs for
children of those lost--it is not surprising that confusion develop in
the minds of the public over exactly what each group is doing. For this
reason coordination among charities is important, as is public
clarification of the different efforts.
Let me address a few issues that have come up recently:
The American Red Cross to my knowledge has never believed or
stated that its work or its request for donations were limited
only to those who were lost on 9/11 and their families. Other
charities have said that. Our messages referred to the broad
range of services in which service to the direct victims of the
9/11 attack was our highest priority. In fact within days of
the attack when we had some $50 million available our goal was
to get needed cash into the hands of those victims who needed
it as soon as possible. But we also had other work to do in
terms of the uncertainty of the times ahead with regard to
future attacks and the need for preparedness.
We have provided assistance to over 25,000 people. We must set
the record straight on one frequently repeated misstatement in
the press and that is that we have flip-flopped on whether to
participate in a New York data base by including the names of
those recipients. Let me quote from a November 2 letter written
by the Red Cross Chairman of the Board of Governors and the
Interim CEO to The New York Times correcting their reporting to
the contrary: ``The American Red Cross has an organization-wide
policy protecting the confidentiality of those we serve. The
American Red Cross President Dr. Bernadine Healy, by declining
to participate in the New York Attorney General's database of
relief recipients, upheld this Red Cross Board of Governors
Policy. The Red Cross operated under the same policy after the
tragedy of Oklahoma City: Recipients' names were not released
without a signed waiver providing permission to release this
information. As of November 2, 2001 this confidentiality policy
has not changed.'' (copy attached)
Blood preparedness has always been of high priority for us,
and that was apparent from the very first attack on the World
Trade Center. Even though the blood demands that we might have
expected did not materialize because so few survived, we
believe that preparedness for another attack requires a
strategic blood reserve of frozen O type blood. Such a reserve
can only be created when there are high levels of blood
donation as we have seen in the aftermath of 9/11. Since red
blood cells outdate in 42 days, we accelerated our investment
in a scaled up freezing program to assure that we could begin
freezing the ``extra O's'' immediately. In our judgement this
is one of our finest investments towards national preparedness
in the wake of 9/11.
The Liberty fund is being used for telecommunications, phone
banks, auditing and other support functions but they must be
related to the 9/11 purposes of the fund and those purposes
alone. The reason for creating a separate and clearly
identified fund under external auditor scrutiny was to assure
that no unrelated or unspecified disbursements be made.
After the attacks of September 11th we worked tirelessly to respond
to these hideous attacks and their aftermath, and set about raising the
blood, the money and the volunteers necessary to respond. We laid out
the work we needed to do and the resources we needed to accomplish them
in as precise a way as we could as the emergencies were evolving. Our
responsibility throughout has been to see that the resources marshaled
are being spent wisely and caringly. I believe they have been and will
continue to be used wisely and caringly. This is what the American Red
Cross Liberty Fund is all about.
Mr. Greenwood. Thank you very much, Dr. Healy. Appreciate
your testimony as well.
And the Chair recognizes himself for 5 minutes for purposes
of inquiry, and let me address my first question to you, Dr.
Healy, and let me ask the $564 million question, if I can. And
that is this: In the 8 weeks since the events of September 11,
thousands and thousands of Americans have reached into their
pockets and their checkbooks and written--given their money to
the Red Cross. Can you assure them today that every dime of
those contributions will go to heal the wounds that this
country sustained on September 11?
Ms. Healy. That is absolutely the commitment that I have
made, that we have made, and I know that that commitment will
continue. One of the most important issues from the very
beginning is that these resources, not be put in an account in
the general Red Cross disaster account that covers floods and
hurricanes and disaster requirements of our chapters, but that
it be segregated, held separately apart so that there would be
no question about how well it could be audited, there would be
no question about how the money was going to be used and there
would be no question about the fact that it would be used for
the specific requirements outlined and approved by our board,
which were the events related to September 11 and to the
aftermath, the healing of America, the preparation for future
attacks. Already we have seen a----
Mr. Greenwood. And let us assume that, God willing, there
are no more future attacks, we have no way of knowing. The Red
Cross has no way of knowing. But at what point could you
imagine the Red Cross feeling sufficiently confident that the
aftermath has passed and that the--to the extent that there
remains a surplus collected in the name of September 11, that
that would then be plowed back to the existing families who you
are now serving?
Ms. Healy. We outlined, in just estimates, that the need
response, the next 6 months, including our family gift program,
would be in the range of about $300 million. That is also the
early preparedness on blood. That roughly $200 million--and
this is up for discussion now. But the $200 million would cover
sort of longer term, maybe the next 18 months, dealing with
preparing our Nation for weapons of mass destruction in our
communities where we have chapters, expanding the blood
reserve, if we believe it should be expanded beyond 100,000
units. Also looking at continuity of operations for the Red
Cross, there are some of our facilities. If you knock them out,
we could cripple America's medicine. And also to make sure that
all along the way our chapters are preparing and ready to help
people, including bringing in new kinds of volunteers, a mercy
battalion. We don't have the volunteers today that can respond
to shelters that need immunization, vaccination, hospice care.
We need a new kind of volunteer to prepare.
Now, to get specifically to your question, we have to make
decisions, because the outpouring has been more than the Red
Cross expected. We were hoping for about $300 million. What we
have to determine is how much should stay in the Liberty Fund.
Should it be the $500 million, which sort of outlines a 2-year
plan? Should we have some reserves? If 5,000 people are harmed
tomorrow, do we go out and ask for another billion dollars from
the American public, or do we carefully steward the money that
is here and make sure that we do have some reserves so that we
can, as equitably, deal with the next attack if there are large
numbers of people, as we have the first?
We have extended our programs to the victims of anthrax, a
small number, but if the number is larger, do we have the
reserves to deal with this? These will be discussions. This is
an evolving issue. These will be discussions held with the
board, with management, and in one press conference where I
laid out all of these range of services of the Red Cross, I was
asked that question, Mr. Greenwood, and I guess my answer
hasn't changed. And that is after a period of time, maybe a
year, 2 years--and it is not going to be us that will determine
that time. It will be what unfolds in this country and in the
world.
Perhaps after 2 years, if it appears that everything is at
peace and we don't have these threats, if the Red Cross does no
longer have to respond almost in a war mode with a war fund,
then in its discretion, the Board of Governors will be able to
take those dollars and reprogram them in some other way. What
is most important is that if that reprogramming occurs, it be
done in a public way and that it be used in some way in the
spirit of how that money is collected. And as long as it is
done publicly, I think we will be okay.
Mr. Greenwood. Let me squeeze another question in here for
Mrs. Steiner and Mrs. McLaughlin, because I think it is
related. Could you just tell us what your long-range concerns
are? Let us assume that you receive from various organizations
something on the order of 30, 40, 50,000 dollars. That sounds
like it might get you through some portion, a year or so, at
best. What are your long-range views for your--you have a 10-
month old child, Mrs. McLaughlin. Mrs. Steiner, you have three
children of college age. What are your concerns for the long
run?
Mrs. McLaughlin. The first concern of every spouse is going
to be how do you keep your home, can you keep your home? If I
receive 30-, $40,000, unfortunately, I could not keep my home.
I can sell it. I can go to an apartment. My concerns really are
for my son's future. My family and friends have--because of
concerns about the charities and because of a lot of
information in the press, especially recently, set up a private
education trust for my son that people are now donating to
directly instead of to the charities. That is the big one.
Mr. Greenwood. Mrs. Steiner.
Did you have something else you wanted to add, Mrs.
McLaughlin?
Mrs. McLaughlin. No. I just--about the 2-years-down-the-
road comment with the Red Cross reprogramming some of these
funds, does that mean that I will wait 2 years to hear from the
Red Cross again?
Ms. Healy. I don't think so.
Mr. Greenwood. Well, we are--unfortunately, we can't do
this in an interrogatory way, but we will try and get your
question answered for you. If you would just slide the
microphone there to Mrs. Steiner.
Mrs. Steiner. Similar concerns, the keeping of my home and
the education of my children to currently----
Mr. Greenwood. Is the microphone turned on there? Push the
button. It is on. Okay.
Mrs. Steiner. The same concerns, the keeping of the home
and the education of my children. And, again, it would be
similar, the $30,000 only goes so far.
Mr. Greenwood. Okay. Thank you, Mrs. Steiner.
Mr. Spitzer. Mr. Chairman, is it proper for me to make an
observation with respect to an answer that Dr. Healy gave?
Mr. Greenwood. Certainly, with----
Mr. Spitzer. I am out of order on this. I suppose I am
concerned by what I hear, which is that I see the Red Cross,
which has raised hundreds of millions of dollars that was
intended by the donating public to be used for the victims of
September 11. I see those funds being sequestered into long-
term plans for an organization not being spent on victims.
I hear words like continuity of operations, reserves,
reprogramming, and we have two victims here at this table who
haven't received the money they need. This is anathema to the--
what the American public expects. When people were writing
their checks for $100, $200 or $10,000, and sending them in in
response to the PSAs that the Red Cross was running, they
believed victims were going to get that money. I speak now as a
New Yorker, and I also speak for the victims in Pennsylvania,
the victims in Virginia. They are supposed to get this money.
This is not for continuity, and it is not for reprogramming.
And this is an issue that demands our attention.
Mr. Greenwood. My time has expired, but I will assure that
you have time to respond to that comment. The Chair recognizes
the gentleman from Florida, Mr. Deutsch.
Mr. Deutsch. Thank you, Mr. Chairman. Mrs. McLaughlin and
Mrs. Steiner, I assume at this point you are familiar with what
Congress did in terms of setting up a fund that the taxpayers
of America and all Americans will participate in. Have you
thought through--are you going to participate in that fund, or
have you thought what options you have personally in terms of
the long-term options you have? If you both can respond just
about the fund. Are you aware of it?
Mrs. McLaughlin. Are you referring to the airline bailout?
Mr. Deutsch. The Federal Government compensation fund that
we have actually set up as a no-fault fund for victims of the
September 11 disaster. Are you familiar with it?
Mrs. McLaughlin. No.
Mr. Deutsch. Mrs. Steiner?
Mrs. Steiner. Me either.
Mr. Deutsch. I can tell you a little bit about it. The
Congress, in the aid package that we passed the week of
September 11, set up a system which no one has applied for yet,
but a no fault compensation fund where the American people--and
it might end up being--the estimates will it will be about a
$10 billion fund, where a victim family can apply on a no-fault
basis without proving any fault of any party, get compensation
effectively for the--what would normally be through a wrongful
death action, and the American people would supply that, and I
guess I am disappointed that neither one of you are aware of
it. But that is the concept of a long-term solution. To Mr.
Spitzer, I mean, obviously you are aware of it. I mean, is
there some, you know, effort to let people know that the
Federal Government has stepped up to the plate and said that--
as much again, the $1.2 million that was raised--this is
directly for victims, would be the estimates are about $10
billion.
Mr. Spitzer. Congressman, you are absolutely correct. The
largest fund will be the Federal claim fund that you create as
part of the airline bailout package. I think the reason it may
not have received as much attention yet is that the Department
of Justice, the U.S. Department of Justice and Attorney General
Ashcroft will have to within, I think, the next 45 days or so,
now issue regulations, appoint a special master, and I hate to
sound bureaucratic, but hopefully that process will be
initiated within a 45-day timeframe, at which point every
victim will, I presume, and of course your data base of victims
will be useful to contact them, will be told of the
availability of this application process, and there will be
almost an unlimited reservoir of funds there for the benefit of
victims. And I think you are right. There has not been
sufficient attention focused on that very worthwhile fund that
Congress created, and I applaud you for having done that.
Mr. Deutsch. And, again, I really truly am disappointed
that you are not aware of it, even with all the agencies
talking to you, that you have--that, again, what is the concept
of it is that, you know, obviously nothing that the Federal
Government can do can ever replace your loss. I mean, by any
stretch of any imagination, but I think collectively what
Congress decided is that we all share directly in this loss,
and as the American people, in a sense, we have said as the
elected representatives of the American people, that we want to
do that. So effectively, we have already appropriated that for
the long-term solution, and the idea is literally not a year
fix, not a 2-year fix, but really a fix that hopefully will put
you at at least a financial situation to try to make you whole.
That really is the concept of what the Federal Government
is trying to do, and I know it is--I mean, hopefully this is--I
mean, after you are on the panel, I mean, either through the
Attorney General, through, you know, myself or your own Members
of Congress, hopefully someone can explain specifically how
that would work.
Dr. Healy, I want to at least give you the opportunity to
respond to what Mr. Spitzer said, and I share with him a real
concern, because I don't believe anyone that wrote a check to
the Red Cross, as important as frozen blood is, you know, in
terms of the September 11 fund, I don't believe anyone who
wrote a check expected that it would be used for frozen blood.
And, you know, as good as what I describe the Federal
Government, I think what is clear is that effort has been
pointed out, is first of all, not everyone is going to choose
to go that route for a variety of reasons, and there are many
people that are just going to fall through all sorts of cracks.
You know, how do you respond to him, particularly, and,
again, I can--unfortunately, we might be faced with other
disasters of extravagant, and hopefully we won't, but when they
come, you know, we are going to--you know, whatever we--you
know, hurricane just missed south Florida. That could have been
another disaster. It was a category 4. Andrew was a category 4.
I mean, eventually we know there will be other disasters, and
when we go back to people and we ask them for support in those
situations, how are you going to respond based upon what you
testified to?
Ms. Healy. Well, first, with the other disaster fund, for
example, hurricanes, if we have money left over from one
hurricane, like Hurricane Floyd, we leave it in that fund and
we will use it for the next hurricane, and that is widely
publicized. We say for this disaster and similar disasters. So
in a way, this is a similar thing, except we are limiting it to
this extraordinary situation, which is a new kind of war.
With regard to whether--you know, I often think about World
War II. It was World War II, and the assistance to those who
died in World War II and the work that we did as American Red
Cross, was it limited only to Pearl Harbor, or did we have an
obligation to recognize that the event surrounding Pearl Harbor
were part of our organization as an American Red Cross.
Remember, we are an organization that is a social organization
that has major responsibilities, internationally, with regard
to blood services and blood readiness. We have obligations with
regard to disaster relief and recovery on an ongoing basis, and
in keeping with our general policies, if there were another
disaster tomorrow and we have reserves in the Liberty Fund, we
would offer the very same services, the same cash grant
programs, the same mental and spiritual counseling, the same
social services that we have offered in New Jersey--in
Pennsylvania, in New York, and at the Pentagon. We would offer
that to this group. We might need to raise more money, but we
would have some reserves.
With regard to reprogramming, I think it is important to
say that we have listed, we have outlined the range of
obligations the Red Cross has to this Nation, the first of
which is the first $200 million or more that is dedicated
solely, solely to the victims. We have outlined the range of
services, which, by the way, also--which--and they are there.
They are articulated. They are clear, but if we no longer
needed it for those specific programs or there was a need--for
example, scholarship programs for children of the victims,
which is not a customary thing the Red Cross does, I would--I
believe that in the wisdom of the board of Governors, they
would see, if we were then at peace, that whatever money
remains in there is put into programs that relate specifically
to the Liberty Fund.
We do not take money out of our disaster reserves for
hurricanes and spend them on something that is not related to
those disasters. We would not take money out of the Liberty
Fund and spend it on any of the other programs--any other
program unless it is already clearly articulated publicly in
every way. I think the American Red Cross has, from the
beginning, gotten out in every way it could and said, no, we
are not the September 11 fund of the United Way, which has said
repeatedly only for the victims and their families of these
three attacks.
Actually, no, I think it is just New York City. We did a
lot of work at the Pentagon. I mean, we did a lot of work in
Pennsylvania. You know, our enterprise, our organization, with
its huge infrastructure, has obligations which go beyond what
specifically happened at the World Trade Center. That doesn't
mean that first and foremost, we aren't helping those people.
In fact, I think the American Red Cross was the first to get
out, for example, with the family grant program.
We have been working tirelessly at Ground Zero with the
rescue workers, as well as with the families, the compassion
centers. So we are there. We are on sight, and we are also
providing the grants. And I make one final comment, and that
is, even our family grant program is designed in a
quintessential American Red Cross way, namely, to do what we
can do to get someone immediately back on their feet with
dignity and to do it in those first several months before other
agencies, other Federal agencies, life insurance, whatever,
kicks in. After 3 or 4 months, other resources will come
available.
Where people are most vulnerable and where they should not
be allowed to be beggars, where they should not have to go hat
in hand to their next-door neighbor or go to their bank and
say, you know, well, we are going to dump you if you don't pay
your mortgage. We clearly develop that family grant program for
that first 3 or 4 months, and in the list of things that we
cover, by the way, without any receipts. That was supposed to
be just on the good faith of the person who applied on this
one-page sheet of paper. What is your rent? What is your
mortgage? We covered it for 3 months. And then we sent a
letter. We said, if you need more beyond this first 3 months,
ask us. It is a grant program. It is tax free, and it is there
without any strings attached, and it is there with almost no
documentation except what our auditors required, which was
Social Security numbers, addresses and, you know, very simple
demographic information.
We have been very excited by this. We have gotten fabulous,
fabulous letters in response to the thousands of people we have
helped already. I still cannot excuse the fact that Mrs.
Steiner had such a difficult time, however.
Mr. Greenwood. Thank you. The time of the gentleman has
expired. The Chair recognizes the chairman of the full
committee, Mr. Tauzin, to inquire.
Chairman Tauzin. Thank you, Mr. Chairman. Mrs. McLaughlin,
Mrs. Steiner, let me first express to you the enormous sorrow
that we all feel for you and your families and the families of
all the victims. I think we all became New Yorkers on September
11, and Pennsylvanians and members of the Pentagon. I think
that is why Americans responded so enormously. We felt, as
Americans, a sense of--a belonging with you as you went through
this. And I think this is sort of central to the inquiry we
make today. What did Americans intend when they responded so
generously to all of these requests for donations and these
special organizations that were set up?
Finding the donor's intent is not always easy, Mr. Spitzer,
you know that, but it is important in this inquiry. And so I
want to turn to you, Dr. Healy, for a brief set of questions.
First of all, did you resign your position with the
American Red Cross. Is that correct?
Ms. Healy. That's correct.
Chairman Tauzin. What date did you resign?
Ms. Healy. Last week, I think last Thursday.
Chairman Tauzin. And you have been replaced by Mr. Decker,
is that correct.
Ms. Healy. Uh-huh.
Chairman Tauzin. At least temporarily.
Ms. Healy. Yes, uh-huh.
Chairman Tauzin. Now, part of the reasons you gave for
resignation included, I understand, your decision to keep the
Liberty Fund money separate from the organization's main relief
fund, and that was a difference of opinion you had with other
members of the board; is that correct?
Ms. Healy. Well, initially, but they basically finally
agreed with it. There were a few people who had some issues out
in the chapters, but that has been resolved.
Chairman Tauzin. But part of the reason you resigned was
that you differed with the board on keeping this money separate
for this disaster?
Ms. Healy. I believe that the money should be kept secret--
kept--hardly secret, very public, but it has to be kept
separate. It is easier to audit. It is easier to have public
disclosure.
Chairman Tauzin. And you cited this as one of the reasons
for your resignation, a difference with the board on that
point. Is that correct?
Ms. Healy. There was a board issue about whether or not the
creation of the separate fund would require a full vote of the
board. There was some differences of opinion about it. The
chairman of the board was completely supportive of the separate
account. It was resolved, and on the last board meeting, it was
adopted fully by the full board.
Chairman Tauzin. The two announcements by the board, which
I know we are going to get to in a separate panel, which I want
to relate to and I want your thoughts on. The first is an
announcement on October 31 that the Liberty Fund--let me read
it. The American Red Cross has raised enough money to help
victims of the terrorist attacks and will stop asking for
donations, according to Mr. Decker. The Liberty Fund held $547
million in pledges as of Monday, and Mr. Decker, the chair's
temporary leader, said it was known from the start that the
fund was for a specific event, the September 11 attacks, and
would eventually be closed.
Do you agree with those statements, that the fund was for a
specific event, would eventually be closed, and that, in fact,
the Red Cross had enough money in this account on October 31
that it should stop raising money for that account?
Ms. Healy. All I can comment on is that the board and
management were in complete lockstep on the specific uses of
this fund, that the fund should be held separate, and with
regard to when it should be closed, you know, that is another
decision. But I do want to stress something, that in the first
24 to 48 hours of this horrible attack on this country, the
largest check that came in was for $3 million for the strategic
blood reserve.
Chairman Tauzin. But Dr. Healy, I don't want to--I really
want to get to--I mean, I have limited time. The second
announcement I want to refer to is October 29 in which the
American Red Cross announced that only a portion of the funds,
only a portion of the funds of that $547 million, approximately
$320 million, would in fact be used for disaster related to the
September 11 attack. That part of the money would actually be
used for other activities, including blood reserve; a
telecommunications upgrade, et cetera.
Now, those two announcements seem to be in diametric
opposition to one another. On the one hand, the Red Cross is
announcing that only three-fifths of this fund is going to be
used for these families, as I think Americans generally
intended when they saw a special fund created for September 11.
Only three-fifths would be used for that--for the families. The
rest would be used for other purposes.
Ms. Healy. Well----
Chairman Tauzin. But wait. And then not 2 days later, the
Red Cross announces that the fund has all the money it needs
for the--to help these families in this disaster and that it no
longer will accept money into this account unless somebody
specifically asks that it be going into this account. Don't you
find--don't you find that awfully strange, that if only three-
fifths of the money is going to be used for these families and
these families are telling us they are not getting the help
that was intended for them, that the Red Cross would announce
that it is got all the money that it needs for this account and
it will collect no more money for it, but by the way, we are
going to use part of it for other purposes. Isn't that rather
strange?
Ms. Healy. Well, what I can tell you is from the very
beginning, we put it on our Web site--in fact, I have included
with my testimony the list of the priorities that are critical
to Red Cross----
Chairman Tauzin. I know that. I live in hurricane areas. I
know there are other priorities.
Ms. Healy. No. No. These all had to do----
Chairman Tauzin. I know all the other priorities. What I am
concerned about, and I think the representative of the New York
Attorney General's office is equally concerned, is that if the
American public responded so generously for funds created for
this specific event, to have two-thirds of that money siphoned
off for other purposes around then to announce within 2 days
that the fund basically is going to be closed and any other
money that is going to come in is going to go into general
purposes now, because there is enough raised for the families.
Ms. Healy. I do not know about that final announcement, but
what must be stressed.
Chairman Tauzin. Something is wrong.
Ms. Healy. There is a judgment that is made about how
America must respond to the events of September 11. The
American Red Cross, from the very beginning, let that be known,
in PSA announcement. It was for the threats that we are facing,
including the uncertainty----
Chairman Tauzin. Dr. Healy, if the Red Cross had announced
that it wanted Americans to donate for this and other terrorist
events and future events----
Ms. Healy. That is what we have announced repeatedly.
Chairman Tauzin. If the Red Cross announced that that is
what it wanted, I am sure the American Red Cross would respond.
We trust the Red Cross. We all do. We donate to it all the
time. Our Congressional families were lined up, members, their
staffs, their wives and their husbands, to donate blood and to
help out, across America. That is not at issue here. What is at
issue here is that a special fund was established for these
families----
Ms. Healy. No. It was established for----
Chairman Tauzin. It was especially funded for this event,
for September 11, and it is being closed now because we are
told enough money has been raised in it, but we are also being
told parenthetically, by the way, we are going to give two-
thirds of it away to other important Red Cross needs. And at
the same time, we hear from families here that their needs are
not being addressed. Now,----
Ms. Healy. The American----
Chairman Tauzin. There is a disconnect, Ms. Healy.
Ms. Healy. But please let me try and clarify it.
Chairman Tauzin. I know you are not with the Red Cross, and
we have got other Red Cross members who are going to testify a
little later on, and they are going to have to respond to these
questions, but I wanted to raise them while you are here. Let
me say, to your benefit, thank you for insisting that the funds
be kept separately. Thank you for resigning if you had a
difference with the board over that point. But I really wonder
what the board is going to tell us when they come up here on
the next panel as to why these decisions have been made to
close this fund and at the same time spend a large part of this
fund on purposes other than the September 11 event.
Ms. Healy. But I have to--I do have to get this very
clearly stated for the record, and that is, if you look even at
some of the documents that I have attached to my testimony, the
American Red Cross immediately saw that for the American Red
Cross to respond to this new kind of war, for us to respond to
the events of September 11 and the aftermath, whether it be
anthrax, whether it be a nuclear hit, whether it be a chem/bio
attack, to respond to that, we absolutely had to make sure that
all of our lines of service were active. We activated
internationally. There were numerous international people who
were involved in these attacks, and we had to work with our
international colleagues abroad. We absolutely have to think
about our military. We have major roles with the military.
Within days we were mobilizing troops. This is the aftermath of
September 11, and we said specifically and repeatedly, it is
for the events of September 11 and its aftermath, and related
to terrorist attacks on this country----
Chairman Tauzin. But why would you close the fund----
Ms. Healy. I didn't make the----
Chairman Tauzin. Right. Let me make the question, put it on
the record. If the fund was really about September 11 and all
the aftermath, which we don't even know yet what the aftermath
looks like.
Ms. Healy. Sadly, right.
Chairman Tauzin. We know some of it. We know the anthrax
attacks. We know the possibility every week we are being told
that these people want to try another event as big or bigger
than September 11. Why on earth, if that is the fact, why would
the fund be closed?
Ms. Healy. Well, first, it is a fact, and I think I have
documentation that I can provide as much as you want. This is
an investigative committee. We would be pleased to provide any
information that shows from the very beginning the specific
things we outlined. By the way, blood is essential. So is bone
marrow, frozen bone marrow. This will be a crisis in this
Nation if we are suddenly faced with a terrorist attack that
provides--that we have to provide 100,000 units of blood to. If
we do not have that blood, we will shut down American medicine
overnight, people who need blood for cancer treatment, for
anemias, for ruptured spleens on highways. We cannot afford----
Chairman Tauzin. My time has expired, Dr. Healy. I would
just ask this question, because I agree with you. If all of
that is true, why would you shut down the fund?
Thank you, Mr. Chairman.
Mr. Greenwood. The Chair thanks the gentleman. The
gentleman's time has expired. And the Chair recognizes the
gentleman from Michigan Mr. Stupak.
Mr. Stupak. Thank you, Mr. Chairman.
Attorney General Spitzer, you outline a number of things
that New York does for charities, like they have to register
and have to have financial reports and things like that. Are
there any time limits when they have to distribute funds to get
them out there? What I am hearing from the families today is
they are waiting and waiting and waiting.
Mr. Spitzer. There is not a statutory deadline by which
funds received must be distributed, but we have in our general
supervisory authority the capacity--if we see that funds are
not being used for an appropriate purpose, the capacity to step
in and get appropriate judicial relief. If an entity were
merely letting funds sit in a bank account without being
distributed at all, we, of course, would take appropriate
action. There is not a requisite percentage each year which
must be allocated.
Mr. Stupak. Is there entitlement before your State would
take action?
Mr. Spitzer. There is not a defined moment in which there
is a trigger, but we are obviously--we have, to give you an
order of magnitude, 40,000 separate charitable entities that
register with us, and so we maintain a level of scrutiny that
is appropriate.
Mr. Stupak. You indicated that since September 11, you have
been urging them to a single application. What kind of response
have you received from that idea?
Mr. Spitzer. There is interest, but it has not yet
happened. And I think it would be--as we have heard today from
these victims, it would certainly alleviate much of the
extraneous paperwork. There are legitimate reasons articulated
by charities, different needs, different inquiries that make it
not as simple a task as one might presume. Having said that,
the concept is right. Many colleges have a common application
form. There are many organizations in the world that have
managed to develop a common simple process by which people can
apply, make their information available, and it's something in
this day and age that we can and should do.
Mr. Stupak. Dr. Healy, if I may--and I hate to keep going
over the same old area, but the reserve fund, when you
testified that some would be held in reserve, and it may be 2
years, I think everybody, at least on this side of the aisle,
wrote that down and said--I mentioned my constituents drove 19
hours to make sure they got their checks to the American Red
Cross. They expected that check to be used now, not 2 years
from now. How do you answer those people that gave to Liberty
Fund and thinking now or hearing now for the first time like we
have that is being held in reserve and may be used for other
purposes.
Ms. Healy. Well, first I think that when a charity goes out
and in this case an organization like the Red Cross, which is a
huge service organization, goes out and asks the public for
funds, the most important thing in the world to do is to try
and communicate what you're asking funds for. In our case, we
needed help in three areas, and we shouldn't ignore the other
two. We went out right away and said, we need blood.
Mr. Stupak. Which you got, and now you have too much.
Ms. Healy. We didn't have too much. We made a decision to
drive our inventories up to wartime level.
Mr. Stupak. Let's keep going.
Ms. Healy. Blood, volunteers and money to do our services.
We laid out our services, which were for the victims----
Mr. Stupak. For the victims.
Ms. Healy. We did not say that. What we said is for the
events of September 11 and their aftermath. We have worked for
over a year and a half on a weapons of mass destruction
program, but we have to prepare for that.
Mr. Stupak. Dr. Healy, you didn't get money from people in
case something in the future may happen.
Ms. Healy. Yes, we did, for preparedness. We got money.
Mr. Stupak. Did you solicit--when my constituents came
here--and I am sure it is like everybody else here--we didn't
come with the idea and give you checks and say, oh, this is for
the future in case there is anthrax. We came on the heels of
September 11 to make sure the money got to the people where it
was needed, not for something that may happen like anthrax. Or
you mentioned a nuclear weapon and mentioned all kinds of
things in your testimony. That is not what the people opened
their hearts and their wallets for. It's for the families, and
they opened it for now. If you want something for in the
future, now that things have settled down--if you thought,
we'll do it on the heels of September 11 and open up the gates
and put up for everything we ever needed, then I think you took
advantage of a very tragic situation. That is the way we see it
up here--at least I see it.
Ms. Healy. But we communicated from the beginning. I
remember hearing the reports on the September 11 Fund in New
York that said only to the victims and their families, and that
is not what we ever communicated. Now maybe there was a lot of
noise out there that implied to the contrary, but we
communicated in virtually every way we possibly could. I think
I probably spoke numerous times on TV, on radio, saying that
these are the lines of service that have been activated. We
must raise money for them.
Mr. Stupak. Even in your testimony today, you said that the
American Red Cross is there to provide that bridge for 3 to 4
months before life insurance and everything else.
Ms. Healy. And we did that.
Mr. Stupak. Right. You did that. But then why isn't all the
money there for the people who really need it in the first 3 to
4 months?
Ms. Healy. You certainly could argue that the entire
billion dollars was only for 5,000 victims, and everyone should
get $200,000, and it adds up. When the Red Cross went out to
solicit contributions, we did it very specifically for these
events and their aftermath. We specifically repeatedly
communicated that this was also about preparing for terrorism.
Mr. Greenwood. The time of the gentleman has expired.
Ms. Healy. We have to continue to get that message out. I
can tell you that anybody who said this----
Mr. Stupak. I don't disagree that when you went out and
solicited money--when the Red Cross actually went out and made
a personal appeal--and you said you got one check for $3
million, that was probably a personal appeal--if you really did
personal appeal, I agree you probably said, we need it for
this, this, this and whatever else comes in the future. But the
people who drove like from my district 19 hours and all the
people who sent in the $5, the $500, the 50 bucks, whatever
they could afford, it wasn't for all these things in the
future, but for these families, and that's where it should be,
all of it; not reserve, not future, all of it.
Ms. Healy. But actually the math adds up pretty well back
at the envelope, because basically we have solicitations of
major corporate donors where we talked about the range of
services always. We have several discretionary grants for
over--one for $15 million. We also on our Website listed the
whole range--and I think we have gotten $60 or $70 million on
the Website where when it pops up, you see what we are spending
those donations on. We also send these directives out to all of
our chapters across the country. They knew exactly what we were
raising money for, and they are outlined in the attachment to
the testimony, which includes first and foremost the victims.
Mr. Stupak. The chairman has told me my time has expired. I
would just say that even on our Website, we listed the Liberty
Fund so people could donate, and it was for the victims. We
didn't intend for all the rest of these, so if Members of
Congress got it wrong----
Ms. Healy. But a lot went to the victims.
Mr. Greenwood. The time of the gentleman has expired.
The Chair recognizes the gentleman from New Hampshire Mr.
Bass for 5 minutes to inquire.
Mr. Bass. Thank you very much, Mr. Chairman.
Dr. Healy, you are tenacious in your spin, but the reality
of it is, and you get the message clearly from this committee,
is that the Red Cross raised a huge amount of money as a result
of the events of September 11. And I read between the lines it
was really not $500 million, it is close to a billion actually.
But you used, just a second ago you said, a total of a billion
dollars. I don't know what that refers to, but in this Liberty
Fund alone, you raised over $500 million. We have the
discrepancies in statements made by Red Cross officials over
time.
The answer to Mrs. McLaughlin's question is that she is
going to wait 2 years. The board of directors is going to
reprogram the money that is going to go to something else. It
may go, it may not. But the fact is, sad to say, that according
to your own testimony, about $200 million of the $500 million
is going to go to the victims and the victims' issues, and the
rest of it is going to go somewhere else. And I don't care what
it says on the back of an envelope or in a PSA and so forth.
You know that if you asked Americans where they thought the
money was going when it was going to the Liberty Fund, they
thought it was going to the victims of the disaster.
The implication that we are never going to be able to raise
another dime in the future for any other disaster, military or
otherwise, and this is all the Red Cross is ever going to see,
and the Americans' charity is now at an end I think is really
just plain spin. I respect what you did by resigning last week,
but the fact is this is a good example of this and perhaps
other organizations are trying to work their way out of a very
embarrassing situation. And I dearly hope that the board of the
Red Cross will reconsider its decision to divert at least the
intent--and I think it was a very specific intent--of Americans
to support the victims, people like Mrs. McLaughlin and Mrs.
Steiner who are facing day-to-day tragedies in their own lives,
to use the money for things other than telecommunications and
frozen blood.
You have an item today on your Website that says you are
going to use $1.7 million of the Liberty Fund for
telecommunications upgrade, and I would ask Mrs. McLaughlin--
I'm not going to ask you to answer this--whether or not you
think that is critical to your lives or any other people who
are involved in this thing.
It is frustrating, Dr. Healy. And we are going to get more
specific information from witnesses who follow you, but I think
that the Red Cross and other charities are going to have over
the coming months a lot of explaining to do because we have
raised unprecedented amounts of money in this country to help
the victims, and it is incumbent on us, our subcommittee, as
oversighter of this to make sure this money goes to those
people. I am sorry that it is hard to understand the
technicalities of your argument, but the reality of it is if
you give it the elephant foot test, Americans thought they were
helping people like Mrs. Steiner and Mrs. McLaughlin, and only
a small amount of those funds have gone for that purpose. And I
yield back to you, Mr. Chairman.
Mr. Greenwood. The Chair recognizes the gentlelady from
Colorado for 5 minutes to inquire.
Ms. DeGette. Thank you, Mr. Chairman.
First of all, I would like to say to Mrs. McLaughlin and
Mrs. Steiner, I also will never be able to fully know what you
are going through, but I want to emphasize that as an American
and also as a mother, and I want to say on behalf of everybody
up here and every single Member of Congress, that as
representatives of your government, I want to apologize that
many of you have been reduced to going around acting like
beggars in the last few months instead of having to spend that
time with your family, and if there is anything we can do to
work with both private charitable agencies and government, we
will do that.
And I have a lot of questions, and the Chair tries to limit
me in particular to 5 minutes, so I will--if we have some time
at the end, sir, I will be happy to let you answer. But I did
want to let the two of you know we all feel that way.
And I want to ask you, Mr. Spitzer, you talked about
coordinating between these various charitable agencies, and
you're right. It is not an appropriate government function so
often. But I'm wondering if that our experience after the
Oklahoma City tragedy has taught us how we could expedite this
coordination. You said there was some coordination, and how far
are we along toward being able to do that?
Mr. Spitzer. The first answer is yes, we learned a great
deal in Oklahoma City, and we have used that model for--to
learn those lessons and have tried to apply it in New York
City, Pennsylvania and Virginia as well. We are not far enough
along. We have, as I said in my opening statement, encountered
some early resistance from the charities. I think we have
overcome that, and we are continuing to do everything we can
do. The charities most recently have been very cooperative and
sitting down together as recently as yesterday to work on the
details, but we cannot move quickly enough.
Ms. DeGette. Do you have some sense of how quickly this
will be done so these humiliations aren't visited upon the
victims?
Mr. Spitzer. I would certainly hope, given the involvement
of IBM, KPMG, I would say 2 to 3 weeks we would hope to have a
template that is up and running. Again, it is contingent,
though, on getting the data and the cooperation of the
charities, and we expect it. They are there, and they
understand.
Ms. DeGette. Thanks.
In a glancing nod to the title of this hearing, protecting
against fraud, waste and abuse, have we seen very many
examples, if any, of fraud, waste and abuse in all of these
charities?
Mr. Spitzer. The answer is we have seen some, but very few.
The affirmative story of the generosity of the American spirit
so far outweighs the few instances of fraud, although we are
prosecuting them vigorously. There are few so far.
Ms. DeGette. Dr. Healy, I also appreciate you coming today,
and I want to ask you a couple of questions following up on
some of the others that were asked. You testified that you were
able to give Mrs. McLaughlin close to $30,000, and just this
morning, you were able to give Mrs. Steiner a fairly
substantial amount, at least to get her through. Can you please
tell me the numerical number of families who you have given
over $25,000 to as of this date?
Ms. Healy. I do not have that specific number. We can
provide it for you.
Ms. DeGette. Do you have any ballpark estimate?
Ms. Healy. I think the average number of the grants is in
the range of slightly under $20,000.
Ms. DeGette. How many of those have you given to date?
Ms. Healy. The overall number is in excess of 2,500. And by
the way, we expected 5,000 people to come forward, and we
have--even had full-page ads saying, please come forward. Have
your neighbor help you fill out the form.
Ms. DeGette. It is your testimony today that what happened
to Mrs. Steiner would be an anomaly?
Ms. Healy. I certainly hope so. We have had problems with
the disaster operations center. We are upgrading it.
Ms. DeGette. Mr. Chairman, if I could ask unanimous consent
to have Dr. Healy supplement her testimony to give us the
exact--obviously, because of confidentiality, I don't want to
know the names of the folks--but the exact numerical amounts of
money and who they've gone to?
Ms. Healy. Pleased to do that.
Ms. DeGette. What timeframe could you do that?
Ms. Healy. We could probably do that within 24 hours.
Ms. DeGette. Mr. Chairman, if I could ask unanimous consent
to have that supplemented.
Mr. Greenwood. Unanimous consent is not required. The lady
of Colorado has made a request. Dr. Healy has agreed to
supplement that.
Ms. DeGette. I would like to follow up on one last thing.
Of the funds in the set-aside fund that you talked about, how
many of them--what is the amount that was solicited by the Red
Cross, and what is the amount that was unsolicited by the Red
Cross?
Ms. Healy. I think that the American Red Cross goes out on
a general appeal. We have PSAs----
Ms. DeGette. I don't need that kind of answer. Do you have
a numerical number? Of the $1.2 billion raised since September
11, some of it is in this Liberty Fund, right?
Ms. Healy. No. The American Red Cross has raised with
pledges about $550 million.
Ms. DeGette. How much of it is in this fund?
Ms. Healy. All of it.
Ms. DeGette. You raised $550 million for that fund. And how
much, as best as you can ascertain, were solicited and how much
of it was sent in by people like Congressman Stupak's
constituents and mine and everybody else?
Ms. Healy. You mean a spontaneous donation? I think we can
get you that number based on the size of the contribution. I
would say probably at least $100 million are from larger
donors. About $70 or $80 million in that range came in from the
Internet.
Ms. DeGette. Do you use the size of donation to determine
whether it was solicited or unsolicited?
Ms. Healy. No. No. All of it is solicited----
Ms. DeGette. Oh, so your view is all of the money that came
to the Red Cross was solicited, and therefore----
Ms. Healy. Maybe the way to say this is that when an event
occurs, when a major disaster occurs--do you know that during
World War II, we had billions of dollars coming in. The public
knows the Red Cross. They know we are there for blood.
Ms. DeGette. You've given this answer. We're pretty clear
on that. But what I am saying is that what you are hearing from
the Members of Congress here--in fact, USA Today quoted a Red
Cross volunteer from Ohio who said, my mother and my little
sister donated money, and it was intended to go to the New York
disaster relief fund. And people I know, they thought that that
money was going to Mrs. McLaughlin and Mrs. Steiner and people
who worked in Windows on the World as busboys and everybody
else. They didn't think it was going to the telephone system.
My question is----
Ms. Healy. You must allow me to clarify the telephone
systems. Only ones that relate to reaching our victims. We had
to have 1-800 lines to get out and call people.
Ms. DeGette. I am not arguing that you need to upgrade your
telephone systems.
Ms. Healy. Please don't say that. We are not upgrading our
telephone systems.
Ms. DeGette. If you will just allow me. If you can answer
my question, it would be helpful. How much of the money--and
maybe you will have to supplement your answer--is from
unsolicited donations, and how much is from solicited
donations? How much was just from school kids who sent in their
money to help the families? And how much of it was it from
people who said the Red Cross has a variety of needs, telephone
service to get out to victims, blood marrow, blood, all these
things that are important and we don't disagree with? Do you
know that?
Ms. Healy. I don't know if we can get you that information.
Ms. DeGette. Thank you. That's all I need.
Mr. Greenwood. Thank the gentlelady from Colorado and
recognize for 5 minutes the gentleman from Kentucky Mr.
Whitfield.
Mr. Whitfield. Thank you, Mr. Chairman.
Ms. Healy, I will go over this once more, but there is a
total in the Liberty Fund that was contributed to the Liberty
Fund of $550 million; is that correct?
Ms. Healy. That is in the range of pledges. I think the
actual cash is around--well, a lot of it has been expended. I
think $150 million has been expended in that range. So that has
already gone out the door, with $50 million of that going
directly to the family grant program and fairly expensive
activities at the Ground Zero operations. Remember, we are in
Pennsylvania. We are at the Pentagon. We are helping in a
broader range of services. I'm a New Yorker. It wasn't just New
York.
Mr. Whitfield. But $50 million went to family grants, and
$100 million went directly to sites to help in various ways.
Ms. Healy. It may be less than that, but I can get you the
specific numbers. But it's in that general range.
Mr. Whitfield. And how was it determined the size of the
family grant?
Ms. Healy. What we did is--and I must say it was done at a
very difficult time. It was actually Cantor Fitzgerald who came
in to see us and said, we are desperate and have people who
have lost their breadwinner. Eighty percent of the people who
died in this event were men in their late 30's who had wives
who weren't working, had young families. A large number of them
lost their breadwinner. They had a cash-flow shortfall.
We have never really done what we did with this family
grant program. Normally in a hurricane or another typical
natural disaster, people's homes get destroyed, but their
economic well-being is intact, their breadwinners. Here their
homes are fine, but they lost their breadwinner, and we
determined immediately how can these people grieve and mourn if
they are worried about paying their rent, paying their
mortgage, paying college tuitions.
We actually started at the top of the World Trade Center
and worked down in a very proactive way to contact these
companies and say, help us get in touch with people who have
lost--who are facing these cash-flow problems, who have this
need. We filled out a very simple form that said, No. 1, how
many people are in your family; No. 2, what is your rent or
mortgage; No. 3, what are your funeral expenses. We paid up to
$10,000 if they weren't otherwise covered. And No. 4, what
other cash-flow needs do you have now? And those have been in
the category of credit card payments and tuition, in some cases
medical bills. We added all that up. We did not ask for
receipts. We wanted to turn it around in 1 to 2 days, and we
looked at that number and we wrote them a check. We capped it
at $30--only because we didn't know if we could possibly raise
enough money to meet that. At this point, we have $50 million
cash on hand.
It was actually kind of a big commitment that we made
because we knew we would probably--if we did it for one person,
we would do it for everybody, that it would possibly be $100
million. So we bit the bullet, we went ahead and made a
commitment to the program and made a commitment to everyone. We
aggressively went out, as I said, spoke to the employees. When
there weren't employers that we could work with, we then went
and opened the compassion center. People had the forms. We
would do it over the telephone. We had full-page ads asking
people to help other people, a neighbor, whomever, to come in
if they lost someone. There were a lot of people who weren't
even associated with companies.
Mr. Whitfield. The $550 million pledge, generally what
percent of the pledge amount do you receive?
Ms. Healy. Of roughly 500? Roughly 500 has been received.
About $60 million or $50 million is still pledged. And most of
that money, by the way, comes in as a general contribution to
this disaster. It does not come in to say for the victims.
Whenever it says for the victims, it goes right into the for
the victims fund, which is very big, $200 million.
Mr. Whitfield. This is for Mrs. Steiner and Mrs.
McLaughlin. If you--from your personal experiences, if you were
meeting with the board of, say, the Red Cross or the United Way
or the Salvation Army or any of these charitable groups, what
recommendation would you make to them that would make it easier
for you?
Mrs. Steiner. Perhaps I would say if people donated
specifically for the event, and I know the magnitude of
disbursing the funds is great, perhaps a down payment toward
their livelihood or to substitute their financial obligations
that their husbands can no longer provide would be a good
start. And then as they work out the details, they could get
back to the victims with additional money.
Mr. Whitfield. Do you feel that the 27,000 is an adequate
amount or----
Mrs. Steiner. That is something I just received this
afternoon, so I haven't really considered it into----
Mr. Whitfield. In your perspective, it was not timely. You
went through a lot. Just the time that it took for you to
receive that money was a real problem.
Mrs. Steiner. Yes.
Mrs. McLaughlin. My experience was a little different. And
like Dr. Healy said, I did indeed receive a large check from
the Red Cross very, very quickly. And it was a very easy
process; probably the easiest of all the charities, in fact the
easiest of all the charities. However, I call back every 3 days
to see if they've lifted the cap. I understand the purpose of
the cap initially for fund-raising concerns, but it is has been
almost 2 months. The money has been raised, but the cap has not
been lifted.
Mr. Whitfield. Which cap are you referring to?
Mrs. McLaughlin. The cap of $30,000 for this family grant
program that the Red Cross pretty generally capped at $30,000.
So while the letter that arrived with the check stated that we
could come back if we needed more, that hasn't been my
experience.
Mr. Baldi. Can I say--add something for Mrs. Steiner? When
I got involved in this, and when she contacted me, I want you
to know the first thing she said to me was she was concerned
about her expenses. And I frankly was overwhelmed because I
thought there would be no problem for her expenses, because my
perception, as was everybody else in my office, as I think many
people, is that all these victims are taken care of. So it
wasn't until I uncovered the information that I showed you
earlier in terms of how little or relatively little she had
received up until this afternoon, I was stunned to see what
wasn't out there when I heard constantly the money that was
being raised, the hundreds of thousand dollars.
So I would add something to the board, which is as follows:
I think there is a public perception that everyone is taken
care of. Under the wisdom of the organizations, those people
are not taken care of in a larger scope--and I am not saying if
it's right or wrong, because other people can make that
decision--then I think that the world ought to be--they ought
to know that your friends and neighbors who you think have now
been covered by all of this money aren't.
And I think that there is a cruel injustice that is going
on. In Mrs. Steiner's situation, she got creditors to delay
payments, but there is going to be a time when she's going to
have to make payments to them, and they are going to be
substantial.
Mr. Whitfield. Your point is that out of a $550 million
pledge, that Mrs. Steiner, as an example, between September 11
and today, prior to today, had received about maybe $1,600.
Mr. Baldi. Right. But in addition, you haven't considered
the United Way. You can keep talking about the Red Cross. The
United Way funds, as far as I know, are in the same category.
And I don't know what's happened at the United Way fund. And
these people also have no sense of what to expect. I mean, the
other problem they have, if someone could sit down with them
and say, look, just so you can make your planning, I know
you're hearing that we have collected $500,000, but you should
understand you are only going to get about $20,000, or you are
going to probably get X amount, something so they can make
plans. So these two people can say to their family, look, this
is what we can expect to see over the next 6 months, over the
next year.
That's what they need is information. So I would suggest
that is what needs to come out to them. Thank you.
Mr. Whitfield. Thank you.
Mr. Greenwood. The time of the gentleman from Kentucky has
expired, and the gentleman from Massachusetts Mr. Markey is
recognized for 5 minutes to inquire.
Mr. Markey. Thank you, Mr. Chairman, very much.
Dr. Healy, first of all, I would like to say that if
reports are true that because of your advocacy that the
Israelis should have been able to use the Star of David as part
of their Red Cross symbol as opposed to the cross or the
Crescent and any way any of your board members were angered by
your efforts to accomplish that goal so that Israel could use
the Star of David, then those people should be ashamed of
themselves. And if in any way they used this incident as a way
of punishing you from trying to protect Israel in its ability
to maintain its own identity, then it is truly a disgraceful
event in the history of the Red Cross, because I believe that
you and Mr. Spitzer should have been able to find some way of
reconciling, along with everyone else here, the differences,
rather than having your board escalate this to a point where
you are not going to be there.
And I think that that is something that is going to be a
great loss to the country, because you are a great Public
Health Service doctor, which is what we need in this position
at this time, a Public Health Service doctor, because
obviously, you were interested in trying to extend the
parameter of protections. I think that the other people here
led by the attorney general of New York, who is a personal
friend of mine, were trying to protect other legitimate
interests as well--very legitimate interests, and I think it is
a sad day when we reach a point like this where we are having a
hearing on a subject like this, because I think that everyone
at the table is as well-intentioned and sincere as Americans
can be in a time of war. There are different perspectives
people are taking as to how we should respond to that war in
this particular area, and I think that is very honorable, but I
think that it really is--and again, I go back to this first
point, because reports are quite extensive about the extent to
which many of your board members opposed your efforts to ensure
that Israel have that ability to use the Star of David.
And so I guess, Mr. Chairman, the only thing I wanted to
say--and I come here with your permission because I am not a
member of this subcommittee--that I respect Dr. Healy and
Attorney General Spitzer, both in ways that reflect the
seriousness of the subject that is being discussed. And I think
that a little more time should have been given, to be honest
with you, by the Red Cross board so that efforts could have
been attempted, which would have precluded the necessity of us
having this hearing. And that is ultimately what I think the
attorney general was trying to accomplish. And I think
ultimately Dr. Healy would have been in that position as well.
And so that's all I really wanted to say. So I thank all of
you for everything that all of you are doing with millions of
people in trying to deal with this state of war that we're in,
and hopefully all other institutions can learn from what
happened here so that we try to resolve conflicts in a peaceful
way.
Ms. Healy. Mr. Markey, could I make a comment? I couldn't
agree with you more when you say this is a war. What happened
on September 11 was the first attack in this war--the first
battle of this war. We have not won this war, and we are facing
some public health crises because every American is now
vulnerable. They are vulnerable emotionally, and they are
vulnerable physically. They are vulnerable--if there is an
attack tomorrow, we must be prepared.
The American Red Cross has played a vital role in
preparedness as well as a response to disaster. It has played a
vital role in the first battle of the war and in the last
battle of a war. And the American Red Cross has a role which is
separate and distinct from United Way or some of the other
charities. Our role is to operate on our multiple lines of
service to help the victims of today and yesterday, but to
prepare for those Americans out there across this country who
are facing vulnerabilities because we are indeed at war.
To that extent, the Liberty Fund is a war fund. It has
evolved into a war fund. We must have blood readiness. We must
have the ability to help our troops if we go into a ground war.
We must have the ability to be there for the victims of
tomorrow, not just the victims of yesterday.
Mr. Markey. Let me ask you, Doctor, do you believe that
given more time that you would have reconciled the differences
with the other parties at the table today?
Ms. Healy. Oh, absolutely, because we all have the same
humanitarian purpose, Mr. Markey. With regard to Mr. Spitzer,
we were just trying to resolve the issue of getting waivers.
You can't break confidentiality. It's like a patient and a
doctor. If the victim will grant a waiver of confidentiality to
the Red Cross, we will share those names in a data base. They
have to say we can. That is a standing policy. We are evolving
to a resolution there, and I am very happy about that.
With regard to the issue of whether or not blood is part of
our response to this horrible, horrible war we are in and
frozen blood, which is a unique approach to dealing with the
terrible blood shortages that we have faced and that we would
face in a WMD attack, we would face a shortage. There would be
Americans out there who could not get blood if we don't respond
now.
Mr. Markey. I would like to ask my friend, the attorney
general, whether or not he believes that if the Red Cross board
had given Dr. Healy more time, that a reconciliation of
positions would have been or could have been reached.
Mr. Spitzer. Let me challenge the premise of the question
is that there was a reconciliation between us individually that
was needed. I think Dr. Healy and I always got along very well.
I think I would say that there was policy dispute, and I have
said this publicly before, and I don't mind saying it again.
I traveled down to the Red Cross offices and had a meeting
with the then general counsel of the Red Cross and Dr. Healy to
try to prevail upon them to adopt the notion of a data base,
which at first Dr. Healy rejected with some rather vehement
statements and said, we will not do this. I thought at the end
of that meeting that we had an understanding that the Red Cross
would proceed with something that I thought was vital and
continues to be vital for the fair, equitable and rapid
distribution of the proceeds. Subsequent thereto, Dr. Healy
again made comments outright rejecting her willingness to
participate in this.
So this is not between Dr. Healy and me individually. I
think that there was a disagreement which Dr. Healy--Dr. Healy
felt deeply, and I respect her view. I disagree with her about
the viability of the Red Cross's participation, but there is
now an agreement between the Red Cross and my office and the
other charities, and we are going forward.
So I think that whether it was an individual disagreement
or not is irrelevant to the victims sitting here who need
funds. What we need to do is get together and get this data
base going, and we are doing it with the Red Cross. And so we
are doing that, and I look forward to working with them.
Mr. Greenwood. The time of the gentleman has expired.
Bit of housekeeping before we dismiss and thank this first
panel. Dr. Healy, could you provide some additional information
to the committee; to wit, we would like copies of transcripts
from radio and television and newspaper advertising, copies of
that that your Red Cross used to solicit funds; any press
releases that you used for the express purpose of soliciting
funds; and the application forms that you used for the victims.
And also, if you could provide us a breakdown from the Red
Cross Website. There are a number of categories, immediate
disaster relief, family gift program, international family
assistance, immediate blood readiness and strategic blood
reserve, Armed Forces service, community outreach, direct
support costs. If you could give us an additional breakdown or
description of what is meant by each of those subcategories,
that would be helpful to us in our deliberations as well.
[The material is retained in subcommittee files.]
Mr. Greenwood. Without objection, the statement of the
gentleman from Florida Mr. Bilirakis will be included in the
record.
Let me thank the panel for your patience and for your
testimony and your help today, particularly again to Mrs.
Steiner and Mrs. McLaughlin for the courage that you have shown
to be with us. I hope that you have confidence that your time
with us will help the other 5,000 families that have suffered
as you have.
And thank you, Mr. Baldi, for joining Mrs. Steiner.
Attorney General Spitzer, thank you for your leadership in
this regard and for being with us.
And Dr. Healy, thank you for fielding all of the hardest
questions today and for being buffeted by members of the
committee. I hope that we are not guilty of the admonition
against making sure that no good deed goes unpunished. And
indeed the Red Cross has served this country mightily for
decades, one of our finest American institutions, and let us
chalk up whatever differences there may be within and without
the Red Cross to the extraordinary nature of these
circumstances and go forward together still respecting to the
highest degree the work of the American Red Cross.
Thank you to the panel. You are excused.
And we will now call the second panel to come forward. And
allow me to introduce the second panel. Mr. Bob Bender, the
Executive Director of the American Red Cross in Greater New
York; Mr. Michael Farley, the Vice President, Chapter Fund-
Raising, of the American Red Cross; Mr. Chris Amundsen,
President and CEO interim of the United Way of America; Mrs.
Joyce Bove, Vice President for Grants and Special Projects,
September 11 Fund New York; and Mr. Vincent Bollon, Secretary-
Treasurer of the International Association of Fire Fighters.
If you, lady and gentlemen, would take your seats at the
witness table, we will proceed. I thank you for your presence
and the testimony you are about to give. Each of you, I am
sure, are aware and made aware that this is an investigative
hearing, and it is the practice of this subcommittee to receive
testimony from witnesses under oath. Do any of you object to
testifying under oath?
Seeing no such objection, pursuant to the rules of the
House and pursuant to the rules of this committee, you are
entitled as a witness before this subcommittee to be
represented by an attorney. Do any of you wish to be
represented by an attorney?
Seeing no affirmative answers, I would ask you to rise and
raise your right hand so I may swear you in.
[Witnesses sworn.]
Mr. Greenwood. You are now under oath, and we will begin
with Mr. Bender. Thank you, sir, for being with us, and we look
forward to your testimony, and you are recognized for 5 minutes
for that purpose.
TESTIMONY OF ROBERT BENDER, JR., EXECUTIVE DIRECTOR, AMERICAN
RED CROSS IN GREATER NEW YORK; MICHAEL FARLEY, VICE PRESIDENT,
CHAPTER FUNDRAISING, AMERICAN RED CROSS; CHRIS AMUNDSEN,
PRESIDENT AND CEO, INTERIM, UNITED WAY OF AMERICA; JOYCE M.
BOVE, VICE PRESIDENT FOR GRANTS AND SPECIAL PROJECTS, SEPTEMBER
11 FUND NEW YORK COMMUNITY TRUST; AND VINCENT J. BOLLON,
GENERAL SECRETARY-TREASURER, INTERNATIONAL ASSOCIATION OF FIRE
FIGHTERS
Mr. Bender. Thank you very much. Just to talk a little
about what the Red Cross is doing at this point in time, we
have registered and have cases on 25,000 families. That means
that we have talked to 25,000 families. We provided assistance
in most cases when assistance was needed. We spent in the
neighborhood of $120 million in direct assistance to families
in 8 weeks. We have reached out to families in a variety of
different ways, including trying to contact them if we can get
names; trying to go to buildings.
I should explain that there are three types of basic
assistance that the Red Cross is providing: one to families
that have either experienced loss or serious injury; a second
to the residents, the people who are affected in the immediate
area of the World Trade Centers because they resided there; and
a third group were some folks who were economically impacted in
the immediate World Trade Center area because of employment
disruptions. And we have tried to be helpful in all three
cases.
The family grant program, which was explained earlier by
Dr. Healy, was for the families who experienced loss or serious
injury. That program was originally a stated need program, and
it was for 3 months in a variety of categories. I should say
that the program has been announced to be extended, and it is
going to go on for any number of months, certainly the first
year and maybe much longer than that as needs develop in the
family. And in each of these cases, we really work with the
family. We begin providing immediate assistance, and most of
that is done on a stated-need basis. And then beyond that, we
begin to work with families, talk with families, trying to
identify with them their needs, and will, in fact, attempt to
either provide those needs or try to link them up with other
organizations that are, in fact, performing services that we
are not.
We have also had over 120,000 mental health contacts with
people. The contact is not a casual contact. It is at least a
15-minute interview with people, our conversation with people
with a describable outcome. These are people who are both the
rescuers, the families. We have worked with the rescuers and
established centers for them so they can find comfort and can
find peace during a very turbulent time and a very traumatized
time for them.
So there's a variety of things that we are doing for the
rescuers and families out of this horrible tragedy in New York
and in the other parts of the terrorist act, and we are doing
those, and it's real, and we were there. We were there within
20 minutes after the first plane hit. We had staff and
volunteers at the World Trade Center. We had staff and
volunteers run away from the World Trade Center when the
collapses began. We lost some equipment, damaged some equipment
as those buildings collapsed. The Red Cross has been there
right from the very first. We will continue to be there. Our
commitment is to be there as long as we need to. We're still
working with families in Oklahoma City. We expect we will be
working with families for years into the future.
And I should say, we do not know all the needs of families.
We are trying to identify those. We don't all need--actually
recognize all the needs we are going to have in the community
for mental health and so forth. There is a lot of work trying
to figure that out, trying to talk to people, trying to
interview people, trying to prepare the community for what it
faces. But we do not know the full need, the full parameters of
need, and that is something we are really investigating.
One other point, the coordination. Attorney General Spitzer
indicated that we are working together. We are an organization
coordinating. We are working with any number of agencies in the
community to coordinate. We are working with the attorney
general's office, and there is going to be an establishment of
a data base that provides benefits and understanding about
benefits.
There is confusion about where to get benefits. The
nonprofits in the community are well aware of that and are
really trying to find ways to simplify the process to make the
process known to people, to find easy ways to access the
process. And we haven't been very successful in that effort,
but we are continuing.
So coordination is beginning to occur. Coordination of
benefits is beginning to occur as well as coordination of
activity. There are conversations going on to try to simplify
the process because we are well aware of that. And for all of
us involved in the relief effort, it is not an absolutely
perfect effort, and that when mistakes are made, and when we
find we made an error about a family, about a case, we try to
go back and try to rectify that area as quickly as possible
because we have an enormous system that we put into New York
City in the first month, 2,000 people, actually 2,500 people
from across the country. We have about 28,000 volunteers now
working in the system. And when you have that many people
focusing on relief, there are going to be differences. The
system is not going to be perfect. We try to resolve that as
best we can.
I think that, in fact, the Red Cross, has, in fact, done
its job, and it is going to continue to do its job for years in
the future on this event.
[The prepared statement of Robert Bender, Jr. follows:]
Prepared Statement of Robert Bender, Jr., Executive Officer, Greater
New York Chapter and Michael Farley, Vice President, Chapter
Fundraising, American Red Cross
INTRODUCTION
Within moments of the first plane tearing into the World Trade
Center on that terrible morning of September 11th, 2001, the tragic
events that transformed this nation also began the largest disaster
response in the history of the American Red Cross--our nation's oldest,
most experienced and most trusted humanitarian organization. A
terrorist event is unlike any other disaster and requires the American
Red Cross to be prepared to serve the American people in accordance
with our Congressional Charter.
The American Red Cross, along with each of us here today, could not
possibly have anticipated the scope of such an event nor have been
fully prepared for the impact this would have on the lives and families
of those affected. As we always do, the Red Cross immediately began
providing emergency relief and emotional support to a nation stunned by
the brutality of an unprecedented attack on American soil. We, like all
other first responders, were overwhelmed in those first chaotic and
uncertain hours following the attack. By 10 a.m. there were hundreds
and thousands missing at ground zero in New York, at the Pentagon and
at the Pennsylvania crash site. All of American was on edge. Rumors
flew. No one knew what would happen next. At the World Trade Center,
there was Red Cross staff unaccounted for, we were without phones, and
our emergency response vehicles couldn't get to the site.
Chartered by Congress in 1905 to maintain a system of national and
international relief, it is the mission of the American Red Cross to
help people prevent, prepare for and respond to emergencies. The Red
Cross is an essential partner with federal response agencies during
disasters through its lead role for mass care under the Federal
Response Plan. Our primary focus is on the human needs of those
affected, and we respond to both the physical and emotional devastation
experienced by people during and after a disaster. Our duty yesterday,
today and tomorrow is to serve humanity with dignity, valor, and
compassion.
IMMEDIATE RESPONSE TO THE EVENTS OF SEPTEMBER 11TH, 2001
The New York Times on October 21st described part of the scene
immediately following the attack on the World Trade Center: ``. . . The
survivors, blanketed in the gray mist of urban disaster, headed north
and east. The attack's human spores bearing their stories, their fear,
throughout the city.'' In the initial hours and days, we took the steps
necessary to establish order out of chaos and support those whose world
had just been torn apart--those in New York walking out of the gray
dust to nowhere, those at the Pentagon fleeing from the intense heat
and flames, and those families urgently wanting to hear about loved
ones whose planes never arrrived. First at the scene in some 67,000
disasters each year, the Red Cross goes to where the people are (be it
at bus stops, subway stations, the East-West highway in New York City,
the Pentagon parking lots or a pasture in Pennsylvania. Thousands of
times over, in New York, Washington and Pennsylvania, we met the needs
of those affected with a compassionate presence. This presence was
possible because the Red Cross has build a nationwide network of
chapters that we can draw from, we are staffed with dedicated
employees, and rely on a vast ``Army of Mercy'' in the words of FDR--
our millions of volunteers.
We do not wait for people to come to us, but reach out to find
those in need. Our immediate disaster response efforts have served
25,000 families by providing direct assistance for food, shelter, and
clothing. For example, in apartment buildings surrounding the World
Trade Center, we found elderly people afraid to venture beyond their
rooms. Many were absent their health care assistants. Red Cross workers
filled prescriptions and made sure that their daily needs were met.
Since the attack, we have provided more than 9 million meals (100,000
meals a day--to families and rescue workers. We found firemen, police,
emergency medical crews and responders of all sorts who needed water,
shelter, a change of clothes, a place to rest, or a place that could
provide silence and solace.
Our Air Incident Response Teams, always on immediate alert, were
dispatched to each departure site and every scheduled arrival site for
the four flights hijacked that day. We also provided teams to the
United Airlines' Headquarters in San Francisco and American Airlines'
Headquarters in Dallas. Mental health, grief counseling and spiritual
support and other referrals were extended in each location. Dozens of
Red Cross chapters nationwide mobilized to help travelers stranded at
airports across the country. It truly has been a tragedy that has
reached across America.
In a time of tremendous uncertainty, we ensured that blood would be
available wherever needed. We mobilized our national blood system to
preposition stocks around the New York metropolitan area, to meet a
need, which unfortunately never came. But we had to be ready. And we
were.
OUTPOURING OF SUPPORT BY THE AMERICAN PEOPLE
As always in the face of tragedy, the American spirit is
indestructible. Just as this heinous act was unprecedented in its
destruction, the response from the people of America is inspiring--
people waiting hours in long lines to donate blood, flooding phone
lines to volunteer their time in any way that was needed, and
personally delivering financial contributions. There was a need for
people to connect with other people and to do something, anything, to
help. We have been deeply honored by the examples of selflessness:
American Airlines flight crews giving blood in honor of their
colleagues who perished, school children taking collections and
organizing car washes, coins collected in bags, and volunteers coming
to our door by the thousands. Even Congress set new records for blood
donations two days after the attacks.
The generous financial and in-kind assistance that the American Red
Cross has received from individuals, companies, foundations is
unprecedented. This is being handled with utmost openness,
accountability and integrity. Therefore, we established the Liberty
Disaster Relief Fund, a separate, segregated account that was created
to hold and disburse funds related to the September 11th attacks, its
aftermath, and other terrorist events. This fund is structured to
ensure that every dollar raised will go to help people who are and will
be affected by acts of terrorism as well as to ensure the Red Cross
will help people whenever and wherever terrorism strikes. We believe
the establishment of this account is the best way to assure absolute
transparency, clear accountability and demonstrate our commitment to
donor intent.
The tremendous outpouring of support by the American people has
enabled the Red Cross to fulfill its mission following these attacks.
In just 7 short weeks, the Red Cross has received pledges and
contributions totaling $564 million. To date $154 million has been
spent or committed, $120 million for direct assistance to 25,000
families in the form of cash and vouchered assistance to cover their
emergency needs including food, clothing and temporary shelter. While
we have a balance of funds uncommitted at this date, we will hold aside
these contributions to be made available for emerging needs. We have
adapted quickly to the level of support and generosity demonstrated by
the American people. To have responsibly disbursed $120 million to
25,000 families in less than 7 weeks is extraordinary and is
unprecedented in the nonprofit world.
Included in these figures is assistance provided under a new
initiative for families who lost loved ones on September 11th. For
families who lost breadwinners, a family gift program has been
established to cover 3 months of financial needs--rent, mortgages,
childcare, and food. To date, Red Cross has spent or committed $47.9
million to more than 2,300 families who have been helped through the
receipt of emergency gift checks. We will continue to work with these
families beyond the initial period to evaluate how else we might
support them in the months ahead.
All of America is grieving. The wife of a Red Cross employee in
Washington, D.C. is constantly haunted by visions of her husband being
killed in an attack on the nation's capital. The father of a nine-year-
old in Memphis, Tennessee wonders how he can stop the nightmares of his
child who dreams about planes crashing into buildings. For these people
and others, we have had close to 135,000 mental health and grief
counseling contacts.
All of our financial assistance is being provided in the most
expeditious way possible. A simple one-page gift form is the only
paperwork required, which is processed promptly with checks issued
overnight. The forms can be done by fax, phone or electronically, and
are available through the Family Assistance Center and at other family
assistance sites in New York City, or any one of our 1,000 chapters
located in communities nationwide.
We do not wait for families to contact us for this assistance. We
have implemented an aggressive outreach program. Early in October, we
placed advertisements in major newspapers appealing to families to come
forward and receive assistance. We've also contacted employers of the
World Trade Center, floor by floor, to reach out to their employees,
searched hospital lists and the list of confirmed deceased. Forty Red
Cross employees and volunteers are dedicating their days to calling and
contacting families who might qualify for cash or other assistance. All
told, we've contacted about 3,300 families, and the number grows daily.
Because this tragic event also injured and killed foreign
nationals, the Red Cross has extended its reach to families across the
globe through our International Family Assistance program. To date, we
have opened more than 169 cases involving the families of foreign
nationals. The Red Cross international aid package includes: financial
assistance for travel to and from the United States, lodging, meals,
local transportation, crisis counseling, advocacy and referral with U.
S. agencies, repatriation of remains, funeral expenses, tracing
services, and information about embassies and consulates. We are being
assisted by our partner Red Cross and Red Crescent societies the world
over.
FINANCIAL STEWARDSHIP AND CHARITABLE FRAUD
The American people have rushed to support our efforts with an
unprecedented surge of generosity. In response, the Red Cross has put
in place stringent accounting measures at both the National
Headquarters and throughout our chapters to ensure stewardship of these
funds. Our internal audit staff and KPMG, our external auditors, began
reviewing and testing control processes and procedures for donations
and disbursements the week following the terrorist attack. That testing
continues. National Headquarters has instructed the corporate external
auditor, KPMG, to begin fiscal year 2002 audit testing of contributions
immediately, and have directed chapters to require the same of their
auditors and independent CPAs.
Federal statutes prohibit the use of the American Red Cross name
and emblem by commercial concerns and unauthorized solicitations (Title
18 USC Sec. 706) and provide for fines and imprisonment (Title 18 USC
Sec. 917). In order to ensure that all donations are collected on
behalf of the Red Cross is received and properly acknowledged for tax
purposes, we have established formal agreements with groups and
businesses that have helped to raise funds. A third-party group can
conduct a fundraiser provided their local Red Cross chapter approves it
and a signed letter of agreement has been received.
This committee has provided leadership in the area of protecting
charitable organizations from fraudulent use of the Internet and other
media in soliciting funds. We applaud your efforts to prevent such
activity. As one of the country's largest non-profit organizations, we
have effective firewalls and tight security protocols in place to
detect and trace these activities. On September 14, the Red Cross sent
an e-mail message to 30,000 previous online donors. This message
included a URL link to an official, secure online donation site. The
American Red Cross and its online partners (aol.com, yahoo.com,
paypal.com, libertyunites.com, and wellsfargo.com) accept credit card
information only through a secure portal on a Web site, not through an
e-mail message. When Internet scams have been detected, we have worked
closely with the Federal Trade Commission and the Department of
Justice, and taken aggressive steps taken to shut them down.
Symantec, an information technology security firm, retained by Red
Cross notified us on October 17, 2001, about the Septer.Trojan computer
virus for potential credit card donors. The virus came in the form of
an executable file attached to an e-mail message that appears to come
from the American Red Cross, United Way and the September 11th Fund.
The American Red Cross Office of General Counsel contacted law
enforcement authorities immediately about this fraudulent act.
COORDINATION OF RELIEF EFFORTS
We typically lead and champion cooperation with other relief
agencies to insure we don't duplicate efforts and to protect against
any gaps in services. The Red Cross leadership and the Attorney General
of New York, Eliot Spitzer, have been engaged in a constructive
dialogue on a means of improving access to the vast disaster relief
resources now marshaled to help the victims of the September 11th
attacks. We are hopeful that a system will be established to enable
disaster relief recipients to maximize the relief resources available
to them.
THE ROAD AHEAD
The American Red Cross will be with the survivors and families
affected by this tragedy for as long as it takes. Our decades of
experience with disaster victims tell us that assistance will be needed
for years to come. We need to ensure that the resources entrusted to us
by the American people will be available to meet these future needs.
Family Assistance Centers were established for the loved ones of
those lost in the World Trade Center and the Pentagon. The Center is
still operating at full strength in New York City. A one-stop relief
center, families can avail themselves of the full breadth of Red Cross
services in an environment where confidentiality, dignity and
compassion are the hallmark attributes. We are committed to this
outreach, and will work with those affected for years after this event.
In other ways, our work has just begun. The site of the World Trade
Center, now called ``The Pile'', is emblematic of the work ahead and
the human needs we will serve. There, work that is physically arduous,
always dangerous and emotionally draining will continue for another 9
to12 months. Construction workers, firemen, police, and emergency
medical technicians are not forgotten. We are operating special respite
centers on-site. It is a place away from the noise and the dirt, where
workers can come to find food, shelter, a change of clothes, a place to
sleep, or to read a card written with special care from a child. This
is a place to refresh the body and the spirit in order to go back, once
again, to their work. This is another example of a new service for us,
a service we adapted to the needs of those involved in this disaster.
We now find ourselves in the grip of a biological attack. We are
assisting the families of those directly affected from anthrax
exposure. We have offered immediate financial assistance through our
Family Gift Program, and we are contacting 16 victims who are or have
been hospitalized for anthrax. Further, because the current attack has
understandably created public anxiety, we are reaching out to
communities with public awareness and education materials. We will
continue to develop these materials to address the community education
requirements regarding biological and chemical agents.
CONCLUSION
The American Red Cross today is helping tens of thousands of people
affected by acts of terrorism in the United States. We were among the
first on the scene and we will be helping people for as long as it
takes. The clear focus of our Liberty Disaster Relief Fund is to ensure
that every dollar raised will go to help people who are and will be
affected by acts of terrorism as well as to ensure the Red Cross will
help people whenever and wherever terrorism strikes. We thank you
Chairman Greenwood and Representative Deutsch for holding this timely
and important hearing.
Mr. Greenwood. Thank you, Mr. Bender, for your testimony.
Mr. Farley, you are recognized for 5 minutes for your
testimony.
TESTIMONY OF MICHAEL FARLEY
Mr. Farley. Thank you, Mr. Chairman. We have submitted a
formal written statement, and hearing the questions of the
committee, I have taken copious notes, and what I would like to
do is perhaps paraphrase my formal statement, but just make a
few comments and then address some questions that had been
raised during the first panel.
And I would like to start by saying first and foremost how
overwhelming this entire experience has been for this country
and the American Red Cross: 4 airline disasters; 5,000 people
missing; mobilization of 44,000 disaster workers, 43,000 of
them trained volunteers; raising of $564 million; an incredible
outpouring of public support. This was an overwhelming
experience for us. We had the discipline of years of disaster
relief experience, but even with that, we were learning in the
moment and on the fly, because every element of our system was
tested and stretched to be responsive to the community.
And I guess I would like to share with you four commitments
that drive our staff and our board at the American Red Cross
that are really the foundations of how we proceed in doing our
work and showing the trust--executing the trust that you, the
American public, has placed in us, which is an enormous
responsibility.
The first commitment is that we first and foremost are
committed to meet the needs of the victims of this tragedy.
That is why we are here. That is what we do. We are very proud
of the fact that in 7 weeks' time, we have directed over $120
million in direct cash assistance in a variety of forms to over
25,000 families. That is an incredibly challenging task to do
responsibly, to be flexible and yet to be consistent. But that
is our first commitment, to be there for the victims of this
tragedy.
And in addition to that, because of the very nature of this
tragedy, we know that the needs of these victims will emerge
for years to come. In Oklahoma City we have the experience of
seeing that today there are still 30 to 40 families that
continue to need assistance. It's the very nature of being a
victim of disaster, and all the more so with terrorism, the
elements and psychology of post-traumatic stress play out for
years to come.
We were among the first agencies on the ground when the
tragedy occurred. We will be among the very last until all the
needs of those victims are met to the best that we understand
them in the years ahead. And we have a responsibility to store
the resources we've been given, to direct them to those needs
of the victims as we understand them in the years ahead.
The second commitment is one of full disclosure. We want to
preserve the trust of the American public and the work of the
Red Cross, because without that, we can't do our work in
disaster response. And it was for that reason that the Liberty
Fund was created through the direction of Dr. Healy and
endorsed by the board of the American Red Cross. There was
never a question as to whether or not these funds should be
segregated and treated differently than other kinds of disaster
relief funds. The issues that were debated internally were how
exactly do we do that, what procedures do we undertake to make
that work. And in order for us to make true to our commitment
to full disclosure and to be good stewards of the outpouring of
American support, we engaged an external third-party auditor,
KPMG, to work with us to develop the guidelines not only for
the fund, but also how the execution of the disaster response
effort is being played out in the field among our 1,050
chapters across the country to assist them, to make sure that
their procedures are in place and consistent with what we need
to do.
There were questions about donor intent, and those are good
questions and important ones because it's something that we
value very highly. If a donor has come to the Red Cross and
said, I want to restrict my gift to the New York City World
Trade Center relief operation, that designation is honored. If
a donor comes to us and says, I want my gift to be directed
toward the development of a blood reserve because I understand
how critically short the supply is of blood, and not knowing
where this tragedy is going to lead us, I think that is an
important part of what we do, and you, Red Cross, can direct
our funds to toward that end. There are other designations in
play. All of those designations are honored by the American Red
Cross when we understand specifically what they are. And for
those cases when the American public, in hearing our ads asking
for support, gives us a contribution online or hands a check to
a disaster response worker, and it's turned into a center, then
we believe that there is a general understanding that is to
support the overall work of the Red Cross, which is first and
foremost directing support to victims, but also supporting
those ancillary activities that make victim assistance possible
in the first place.
Like transporting our volunteers to Ground Zero and like
preparing a communications system that allows the victims to
call us and ask, ``Where do I go to get assistance?'' so we are
committed to full disclosure for what we are doing.
The third commitment is that we are totally committed to
collaboration. Bob Bender and Attorney General Spitzer have
been working together with our national leadership to look at
ways in which we could collaborate with other responding
agencies, and the reason for that is we need to make sure that
there is a safety net of healing in place to catch all the
needs of the victims, and one agency alone is not sufficient to
meet those needs. But together we can do, I think, a terrific
job in responding to the direct needs of those victims. So we
have a commitment to collaborate with our responding agencies
to ensure that the information is there about the services
available, as well as how the funds are being used and where
the clients are so that we can best connect services to
clients.
There are a lot of details that go with that, but I think
one of the lessons of this tragedy is that we need to play
together in a way like we have not done before, because the
entire situation of terrorism has changed the way we live and
the way we work together.
And the fourth commitment is finally to evaluate the uses
and purposes of the Liberty Fund so that we ensure that the
donor intent is honored and that we are able to respond to the
needs of the victims of this tragedy and to other situations
which emerge from it so that we can make sure we are directing
those funds in the best way possible.
That commitment to evaluate what we do will be undertaken
by our board. Those are policy issues. There are also activity
that needs to be done in light of the donor intent, as we
understand it, for the use of those funds. So those are some--
four ideas, commitments that we have, and I would like, I
think, at this point to open--or pass on my time to the next
presenter.
Mr. Greenwood. Thank you, Mr. Farley. Mr. Amundsen, we
thank you for your testimony. You are recognized for 5 minutes.
TESTIMONY OF CHRIS AMUNDSEN
Mr. Amundsen. Thank you. Good afternoon. Thank you for this
opportunity to discuss how United Ways across the country have
responded to the September 11 tragedy. United Way of America is
a national service and training center for the 1,400-member
United Way system. Each United Way is independent, separately
incorporated and governed by local volunteers. United Way of
America's role is to equip United Ways as well as their
corporate and philanthropic partners with the tools they need
to make immeasurable impact in the communities that they serve.
In 2000, United Ways collectively raised nearly $4 billion
to address the local needs of communities. But United Way is
much more than a fund-raiser. Listening to the diverse voices
in their communities, local United Ways are identifying the
most urgent needs and focusing their efforts on priority
issues. These issues vary from community to community, but
United Ways across the country are working to strengthen and
support families, help children to succeed, build vital and
safe neighborhoods and promote self-sufficiencies.
This work is at the heart of the United Way mission.
Communities across the country have instituted programs to
address the immediate needs and to combat the ripple effect of
the September 11 attacks. As you will hear, the September 11
Fund, a crisis response effort established by the United Way of
New York City and the New York Community Trust, is currently
making allocations to agencies, providing direct financial
assistance, emergency services, counseling and other critical
community supports.
On September 11, United Way of America received its first
corporate gift to the response to this tragedy from the
Williams Company of Tulsa, Oklahoma. Later that day this gift
became the first corporate support of the September 11 Fund. We
received many other generous gifts, as did local United Ways in
support of the fund.
Next, the United Way of America convened a group of crisis
veterans from local United Ways that have dealt with terrorist
situations such as Oklahoma City, natural disasters like
Hurricane Andrew in Miami and other traumatic events, such as
the Columbine shootings in Colorado. This group and their
lessons learned were made available for Ground Zero, United
Ways and others to advise them on how to deal with this crisis.
Other vital programs have been launched in communities
country-wide. Right here in Washington, the United Way of the
National Capitol Area has brought together a volunteer
governance committee to oversee the disbursement of funds that
have been raised to benefit those affected by the attack on the
Pentagon. In addition, our hometown United Way is helping to
coordinate health and human service agencies responding to the
crisis and linking victims to those agencies so their immediate
and long-term recovery needs will be met.
Included in my written testimony is the United Way in
Service to the Nation report.
In the wake of the September 11 tragedy, United Ways across
the country have been doing what they do best, mobilizing their
community to deal with their most urgent needs. Both United Way
donors, contributors are being--donor contributions, excuse me,
are being put to use, helping children cope with loss and
fears, readying families facing military deployment, promoting
tolerance and assisting families affected by the layoffs and
the economic impact of the tragedy.
Let me give you a few examples. Dealing with the stress and
grief associated with the tragedy of unprecedented magnitude
can be a tremendous burden. We all know that a crisis like this
is especially hard on our children. Many United Ways have
brought their efforts to bear on this area of concern by
communicating with children through the support of counseling
and other services directed at children.
United Way in Detroit, Michigan, convened a meeting of more
than a hundred children from United Way agencies, players from
the Detroit Lions football team, and various social workers and
counselors to discuss the events of September 11.
Many employees, especially in the airline industry and
tourism industry, were laid off as a result of this economic
downturn. United Ways, especially those in high tourism areas,
are acting quickly to deal with these particular needs. The
United Way in Orlando, Florida is leading an effort with local
foundations to provide immediate financial assistance to
workers in the tourism and travel industries who have lost
their jobs or are experiencing reduced incomes. They will also
develop long-term plans for a community safety net for times of
crisis.
Looking ahead, United Way Board of Governors is in the
process of developing a national response committee which will,
among other things, develop a national crisis response plan for
the United Way system that will ensure a swift, coordinated and
effective response to any future major national crisis.
The events of September 11 will have a lasting effect on
people and communities across the country. Beyond the lives and
the buildings shattered by the attack, the images of
devastation that we have witnessed as a Nation will forever
tarnish our sense of security.
United Way is a living, breathing part of the communities
directly impacted by the terrorist attacks. Long after the
rescue teams have disbursed, the United Way will be there to
heal lives, families and communities.
Thank you.
[The prepared statement of Chris Amundsen follows:]
Prepared Statement of Chris Amundsen, Interim President and CEO, United
Way of America
Good afternoon. Mr. Chairman, Mr. Ranking Member, members of the
Subcommittee, thank you for this opportunity to discuss how United Ways
across the country have responded to the September 11th tragedy.
UNITED WAY OF AMERICA
I am the Interim President and CEO of United Way of America. United
Way of America is the national service and training center for the
1,400 member strong United Way system. Each United Way is independent,
separately incorporated, and governed by local volunteers. United Way
of America's role is to equip United Ways--as well as their corporate
and philanthropic partners--with the tools that they need to make a
measurable impact in the communities they serve.
United Ways collectively raised nearly $4 billion in last year's
campaign. But United Way is more than a fundraiser.
Listening to diverse voices in their communities, local United Ways
are identifying the most urgent of needs and focusing their efforts on
priority issues. These issues vary from community to community, but
United Ways across the country are working to strengthen and support
families, help children and youth succeed, build vital and safe
neighborhoods, and promote self-sufficiency. This work is at the heart
of the United Way mission.
UNITED WAY SYSTEM RESPONDS TO RECENT TRAGEDIES
Communities across the country have instituted programs to combat
the ``ripple effect'' of the September 11th attacks. As you have heard/
will hear the September 11th Fund, a crisis response effort established
by the United Way of New York City and The New York Community Trust, is
currently making allocations to agencies providing direct financial
assistance, emergency services, counseling and other critical community
supports. On September 11th United Way of America received its first
corporate gift in response to this tragedy from Williams. Later that
day, this gift became the first corporate support of the September 11th
Fund. We received many other generous gifts, as did Local United Ways,
in support of The Fund.
Next, United Way of America convened a group of crisis veterans
from local United Ways that have dealt with terrorist situations, such
as Oklahoma City, natural disasters like Hurricane Andrew in Miami, and
other traumatic events, such as the Columbine shootings. This group,
and their lessons learned, were made available for the ground zero
United Ways and others to advise them on how to deal with the crisis.
Other vital programs have been launched in communities countrywide.
Right here in Washington, the United Way of the National Capital Area
has brought together a volunteer governance committee to oversee the
disbursement of funds that have been raised to benefit those affected
by the attack on the Pentagon. In addition, our hometown United Way is
helping to coordinate health and human service agencies responding to
the crisis, and linking victims to those agencies so their immediate
and long-term recovery needs will be met.
Included in my written testimony is the ``United Way in Service to
the Nation'' report. In the wake of the September 11th tragedy, United
Ways across the country have been doing what they do best--mobilizing
their communities to deal with their most urgent needs. Local United
Way donor contributions are being put to use helping children cope with
loss and fears, readying families facing military deployment, promoting
tolerance and assisting families affected by the layoffs and the
economic impact.
Let me give you a few examples. Dealing with the stress and grief
associated with a tragedy of unprecedented magnitude can be a
tremendous burden. We all know that a crisis like this can be
especially hard on our children. Many United Ways have brought their
efforts to bear on this area of concern by communicating with children
through the support of counseling and other services directed at
children.
The United Way in Detroit, Michigan convened a meeting with
more than 100 children from United Way agencies, players from
the Detroit Lions football team and various social workers and
counselors to discuss September 11th.
Many employees, especially in the airline and tourism industries,
were laid off as a result of the current economic downturn. United
Ways, especially those in high tourism areas, are acting quickly to
deal with these particular needs.
The United Way in Orlando, Florida is leading an effort with
local foundations to provide immediate financial assistance to
workers in the tourism and travel industries who have lost
their jobs or are experiencing reduced income. They will also
develop long-term plans for a community safety net for times of
crisis.
Looking ahead, United Way of America's Board of Governors is in the
process of developing a national response committee which will, among
other things, develop a national crisis response plan for the United
Way system that will ensure a swift, coordinated and effective response
to any future major national crisis.
The events of September 11th will have a lasting effect on people
and communities across the country. Beyond the lives and buildings
shattered by the attack, the images of devastation that we witnessed as
a nation will forever tarnish our sense of security. United Way is a
living, breathing part of the communities directly impacted by the
terrorist attacks. Long after the rescue teams have dispersed, United
Way will be there to heal lives, families and communities.
Thank you for your time.
Mr. Bass [presiding]. The Chair recognizes Joyce--is it
Bove?
Ms. Bove. Bove.
Mr. Bass. You are recognized for 5 minutes.
TESTIMONY OF JOYCE M. BOVE
Ms. Bove. Thank you. My name is Joyce Bove, and I am Vice
President of the New York Community Trust, which together with
the United Way of New York City, created the September 11 Fund
to meet the immediate and longer term needs of victims,
families and communities affected by the events of September
11. I have submitted formal written testimony, and at this
point I am just going to summarize three main points.
First, the September 11 Fund began immediately. In its
first 8 weeks, it reviewed and awarded 80 grants totaling $47
million to meet a range of emergency needs through established
relief and other nonprofit agencies. As a result, more than
15,000 checks have been written, most on the spot, to
individual victims and families for rent, mortgage payments,
utilities, tuition and other cash needs. More than 4,600 people
have received crisis counseling. More than 2,000 adults and
children, including 700 rescue workers, have received disaster
mental health services. More than 1,000 people who have lost
their jobs have met with career advisers. More than 500
children were counseled in bereavement groups. Replacement
ambulances and training were provided. Funeral expenses, not
covered elsewhere, have been met.
In order to make sure people knew what is available to
them, toll free hotlines were established, and a comprehensive
resource referral guide was created for individuals, families,
businesses and agencies seeking information and assistance on
disaster relief. It is used at the Family Assistance Center and
throughout the city and is available online as well.
Second, to address longer term needs, the efforts of the
September 11 Fund must be coordinated with other funders and
service providers. Even though $300 million seems like a great
deal of money and is a great deal of money, it is far from
enough to meet all the needs of all of the various victims of
September 11. In order to make sure that no one is left behind,
we are working and will continue to work closely with the many
government and nonprofit organizations to understand the needs
of the many different kinds of victims, to understand which
institutions will provide help and to see where we must move in
to fill the gaps.
Third, every single dollar raised by the September 11 Fund
goes directly to grants to meet the needs of victims, their
families and affected communities. We have raised all of the
fund's administrative costs separately. In addition, the fund
relies heavily on the knowledge and expertise of the United Way
and the New York Community Trust, as well as other experts on
loan to us from foundations and businesses.
So much more needs to be done, but we are proud of the work
that we have done today and are working energetically with
others to develop a fair and effective response to the
September 11 tragedies. We know it is important that our
program be accountable, both to the public and the millions of
donors who have put their trust in us. We invite the committee
and the public to follow the decisions we make and the results
that they generate through our Web site,
www.September11fund.org, where we post information regularly.
In summary, the September 11 Fund is focusing on the needs
of victims, their families and the affected communities by
providing funds to experienced, front-line agencies for
emergency needs. We will continue to support coordination
efforts and are working hard with others to develop programs
for longer term needs that are effective, fair and leave no one
behind.
Thank you.
[The prepared statement of Joyce M. Bove follows:]
Prepared Statement of Joyce M. Bove, VP, Programs & Projects, The New
York Community Trust
Mr. Chairman and Members of the Subcommittee: Good Afternoon. I am
Joyce Bove, Vice President of the New York Community Trust, which with
the United Way of New York City created the September 11th Fund. Thank
you for holding this hearing on an issue that concerns us all: ensuring
that we provide aid and support to the victims of September 11th, their
families and affected communities. I would like to report on The Fund's
activities to date and plans for the future.
I will start by providing you with some background on who we are.
The September 11th Fund was established by The United Way of New York
City and the New York Community Trust to provide a way for millions to
help meet the immediate and longer-term needs of victims, their
families, and the communities affected by the terrorist attacks of
September 11.
Both of these organizations have a long history of helping people
help others. They do so by finding, choosing and funding nonprofit
organizations and agencies with the expertise and ability to provide
whatever help is needed. Using the expertise and experience of both
organizations, the September 11th Fund was able to move quickly, making
over 80 emergency grants to meet the broad array of needs that have
arisen and will continue to arise as a result of the tragedies of
September 11th.
The Fund began immediately to make grants that meet emergency
needs. Thus far, we have made a total of $47 million in grants--
supporting agencies that provide cash assistance, legal counseling,
grief therapy, job training and placement and other services for
victims. We believe that we've made it possible for over 16,000 people
to find and get the emergency help they need. However, the Fund must
also help meet the longer-term needs of victims, their families and
affected communities, and we are working with others to do just that.
At the core, what every one of us wants is to help people and
communities rebuild their lives.
To date, more than a million people and many corporations and
foundations have pledged a total of $337 million to the September 11th
Fund 1. More than $250 million has already been collected.
Administrative costs of the Fund have been raised separately by The New
York Community Trust and The United Way of NYC--therefore 100% of
donations to the September 11th Fund will go directly to grants to help
victims, their families and affected communities.
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\1\ The Fund is made up of two funds--a general fund formed by the
United Way and the New York Community Trust, and a fund from the
national telethon, ``Tribute to Heroes'', that was broadcast on the
major television networks. Both funds are intended to aid victims and
their families; the general fund also is intended to support the
communities affected by the September 11th attacks.
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There are three points about the work that we are doing that I
would like to make:
First, immediate needs are being met in the fastest way possible,
by experienced disaster relief agencies. Since the first tragic days of
the attack, the September 11th Fund has been providing emergency grants
to organizations directly serving immediate needs of victims and their
families. We have made it possible for thousands of people to receive
cash support, legal advice, grief counseling and other emergency needs.
Second, to address longer-term needs, the efforts of the September
11th Fund must be coordinated with other funders and service providers.
Even though $300 million is a great deal of money, it is far from
enough to meet all the needs of all of the victims of September 11th.
In order to make sure that no one is left behind, we are working and
will continue to work closely with the many government and private
organizations: to understand the needs of the many different kinds of
victims, to understand which institutions will provide help, and to see
where we must move to ``fill in the gaps''.
Third, every dollar raised by The September 11th Fund goes directly
to grants to meet the needs of victims, their families and affected
communities. We have raised all of the Fund's administrative costs
separately. In addition, the Fund relies heavily on the knowledge and
expertise of the United Way & The New York Community Trust, as well as
other experts on loan from foundations and businesses.
Now, please allow me to detail the relief efforts of the September
11th Fund to date.
MEETING EMERGENCY NEEDS
On September 11th, the United Way of New York City and the New York
Community Trust created The September 11th Fund as a joint response to
the terrorist attacks on America.
That very day, a web site was created to accept online donations
and describe the Fund's purpose and goals. Over the next three days,
the Fund organizers hosted a series of meetings with disaster relief
and other nonprofit agencies to anticipate emergency needs and
coordinate efforts. We received our first grant proposal on September
19th (even before we had published a formal ``Notice of Available
Funds''). On September 22, eleven days after the tragedies occurred,
Safe Horizon began distributing checks to victims using funding from
The September 11th Fund.
In its first eight weeks, The September 11th Fund has reviewed and
awarded 80 grants totaling $47 million to meet a range of emergency
needs through established relief agencies. As a result:
more than 15,000 checks have been written--most on the spot--
to individual victims and families for rent, mortgage payments,
utilities, tuition and other cash needs
more than 4,600 people have received crisis counseling
more than 2,000 adults and children, including 700 rescue
workers, have received disaster mental health services
more than 1,000 people who have lost their jobs have met with
career advisors
more than 500 children were counseled in bereavement groups
replacement ambulances and training were provided
funeral expenses that were not covered elsewhere have been met
In order to make sure people know what is available to them:
toll-free hotlines were established and
a comprehensive resource referral guide was created for
individuals, families, businesses and agencies seeking
information and assistance on disaster relief. It is used at
the Family Assistance Center and throughout the city and is
available on line, as well.
As with all established grant-making institutions, grant recipients
must provide regular reports on the use of their funds, the results of
their services, and financial accounting of their expenditures.
And while our staff--composed of individuals from the United Way of
New York City and the New York Community Trust, as well as the Ford
Foundation and others--responds to hundreds of proposals and meets with
countless service providers and government agencies, we are
simultaneously assessing longer-term needs.
MEETING LONGER-TERM NEEDS
Which brings me to my second point: longer-term assistance must be
coordinated in order to determine fairly and accurately the needs of
victims, their families and communities, and available sources of
support.
To coordinate assistance efforts, The September 11th Fund was among
the first supporters of a central database that would both make it
easier for those in need to apply for assistance, and for charitable
organizations to assess those needs and limit the duplication of
efforts. Because we are mindful of the privacy rights of individuals,
we are working closely with New York State Attorney General Eliot
Spitzer and the front line providers of support to victims, the Red
Cross, Safe Horizon, the Salvation Army, and others.
Even without a database, there is a remarkable amount of
coordination taking place. Government agencies from the Federal, State
and City work every day with the front line charities, such as the Red
Cross, Safe Horizon and Salvation Army. They meet frequently to
coordinate their programs and unplug bottlenecks. As an organization
that helps fund these efforts, we are encouraging even greater
coordination.
One of our major tasks in developing a program is to understand the
range of people and institutions affected by this tragedy and their
needs. None would argue that the family of someone who died, or someone
who was severely injured shouldn't receive aid, but many of our donors
also recognize the needs of those who lost their jobs, who lost their
homes, or who have been traumatized as a result of helping out at
Ground Zero or the Pentagon. Others have pointed out that September
11th also destroyed the homes of hundreds of nonprofits and small
businesses.
Many of the needs of these victims can and will be provided for by
others--by government programs or special purpose charities.
Nonetheless, a traditional role for philanthropy is to help those who
``fall through the cracks''. For example, what about the second
families of victims who are not eligible for government aid? And
elderly parents who are not technically dependents, but who were
receiving help with rent or mortgage payments? Should we not make sure
that all victims receive help?
Equally important, we must recognize that victims have a range of
needs. Clearly financial security is important, but so, too, is
counseling and grief therapy, legal and financial advice, and help with
new jobs and restored homes.
Some of these needs may not be apparent for quite some time. It may
be months, sometimes even years, before a family realizes that they
need counseling. We need to ensure that we provide adequate resources
for these needs as they arise.
We are already beginning the work necessary to develop this long-
term program. We have already established a Board of Directors, drawing
from the United Way, the New York Community Trust, the entertainment
industry and others from business and civic life. That Board is chaired
by Franklin Thomas, former president of the Ford Foundation. We have
hired a small staff, and will continue to rely on the expertise of some
of the best grantmakers in the country from the New York Community
Trust, United Way, the Ford Foundation and others.
Over the next weeks and months we will make critical decisions
about funding priorities, analyze the needs of those who are affected
by the September 11th tragedy, and seek to meet those needs that are
not being met by others. We will do so, as with the emergency grant
program, by providing grants to organizations with the expertise and
ability to do so, as quickly, efficiently, and fairly as possible.
Since developing this program necessarily involves working with
government agencies and other charities, and since some of these have
not yet decided how they can and will help, the process will take some
time. This is another reason we consider it so important to meet the
emergency needs immediately. Our emergency grants are helping do so.
Now, for my third and final point.
The September 11th Fund is a lean organization that relies heavily
on resources donated by The United Way of New York City, the New York
Community Trust, and others. None of our administration costs come out
of The Fund. Instead, several foundations contributed funds
specifically for this purpose. The September 11th Fund currently
operates with a (tireless) staff of four. Thanks to the experts at the
NY Community Trust, the United Way of New York City and others who are
donating their time and expertise, grants that normally would take 4-6
months for approvals are being researched and awarded much more
quickly, sometimes within one week. This is only possible because these
staff members have years of experience in the nonprofit community,
specifically funding emergency assistance and community needs.
Our distinguished board chairman, Franklin Thomas, and our board of
directors, made up of leaders from the philanthropic, business and
social service communities, are also contributing their time, as well
as resources from their institutions.
We are proud of the work that we have done to date, and are working
energetically with others to develop a fair and effective response to
the September 11th tragedies. We know that it is important that our
program be accountable, both to the public and the millions of donors
who have put their trust in us. We invite the committee and the public
to follow the decisions we make and the results that they generate
through our web site, www.september11fund.org, where we post
information regularly.
In summary, the September 11th Fund is focusing on the needs of the
victims, their families and the affected communities by providing funds
to experienced front-line agencies for emergency needs. We will
continue to support coordination efforts, and are working hard with
others to develop programs for long-term needs that are effective, fair
and leave no one behind.
Mr. Greenwood. Thank you, Ms. Bove. Mr. Bollon, you are
recognized for 5 minutes for your testimony. Thank you for
being with us.
TESTIMONY OF VINCENT J. BOLLON
Mr. Bollon. Mr. Chairman, thank you for the opportunity to
appear before you--this subcommittee today. My name is Vincent
Bollon, and I am General Secretary Treasury of the
International Association of Fire Fighters, which represents
more than 245,000 professional firefighters and paramedics who
protect 80 percent of the Nation's population. I am also
Secretary Treasurer and a director of the New York Firefighters
9-11 Disaster Relief Fund.
I have a deep personal interest in the subject of today's
hearings, because I am and always will be a New York City
firefighter. I have served as President of the Uniformed Fire
Officers Association of New York City and the Secretary
Treasurer of the Uniformed Fire Fighters Association of New
York City. I was a member of the Fire Department Board of New
York for 33 years.
The second I saw the Twin Towers collapse, I knew I had a
lot of personal friends lost. We know now that 344 firefighters
and emergency medical service personnel died in the line of
duty on September 11. To put things in perspective, the most
firefighters ever lost due to one incident prior to September
11 was 24.
We lost so many members on September 11 because they
continued to climb up the stairs to evacuate the World Trade
Center, even after the second airplane struck. Their rescue
efforts saved thousands of civilian lives. The tragedy will
have an enormous financial impact on the fallen firefighters'
families. Years after the memorial services are held, hundreds
of mortgages will still have to be paid, hundreds of dependents
will still need to be fed and clothed, and hundreds of children
will still need to be educated.
The IFF acted quickly to respond to these needs. Working
with the executive board of our two New York affiliates, we
immediately established the New York Firefighters 9-11 Disaster
Relief Fund as a nonprofit charitable corporation. The purpose
of this fund is to provide humanitarian aid to the families of
firefighters and emergency medical service personnel who died
in connection with the destruction of the World Trade Center.
It is authorized to receive and distribute funds to provide
financial aid to the families in meeting their living expenses.
These funds will go directly to the families.
The fund has abided by the highest ethical and legal
standards governing charitable fund administration. The fund's
board of directors decided that the fund would not lend its
name to any solicitation activity that even hinted at
commercial exploitation of the fund's name, and we have
employed no professional fund-raisers. When we learned that the
fund was included on several prominent Internet Web sites, we
carefully reviewed the laws of all 50 States to determine our
obligation under each State's charitable solicitation laws, and
we have applied to register the fund in each of the States that
required a charitable solicitation registration.
We also established contact with the New York Attorney
General's office regarding its efforts to both track down
fraudulent fund-raising efforts and to coordinate charitable
assistance relief for the September 11 victims.
As of this morning, the New York Firefighter 9-11 Disaster
Relief Fund has raised approximately $63 million. We have made
two distributions of $10,000 a piece to each of the 344
families, amounting to nearly $7 million, to help meet the
immediate financial needs. We made the first of these two
distributions more than a month ago. The fund's board of
directors is now developing the criteria to ensure that the
families' humanitarian needs will be met in a manner consistent
with our fiduciary duties and applicable law, including the
Internal Revenue Code.
We also have been extremely careful to ensure that the
money donated to the firefighters' families was not wasted on
unreasonable administrative expenses. I am proud to report to
this subcommittee that to date less than two-thirds of 1
percent of the money donated to this fund has been committed to
administrative costs, and as a 501(c)(3) organization and a
registered charity, we will submit publicly available reports
to the Internal Revenue Service and the States detailing the
amounts we have raised and paid out.
We also continue to work on a daily basis to ensure that no
one is using our good name of our fund or logo of the IFF to
defraud the public. For instance, we recently shut down one
fund-raiser who was soliciting funds over the Internet in the
name of our fund into an account that had no connection with
our fund. As the fund, we strive to meet the humanitarian needs
of the families of our fallen firefighters with minimal
administration cost and in a straightforward and honest manner.
No firefighter should have to think about who will take care of
his family when he is entering a burning building to save your
life.
I would be happy to entertain any questions from the
members of the subcommittee. Thank you.
[The prepared statement of Vincent J. Bollon follows:]
Prepared Statement of Vincent J. Bollon, General Secretary-Treasurer of
the International Association of Fire Fighters and Secretary-Treasurer
of the New York Firefighters 9-11 Disaster Relief Fund
Mr. Chairman, I thank you for the opportunity to appear before this
subcommittee today.
My name is Vincent J. Bollon. I am the General Secretary-Treasurer
for the International Association of Fire Fighters (the ``IAFF''),
which represents more than 245,000 professional fire fighters and
paramedics who protect 80 percent of our nation's population. I am also
Secretary-Treasurer and a director for the New York Firefighters 9-11
Disaster Relief Fund, which was established by the IAFF to provide
humanitarian assistance to the families of fire fighters and emergency
medical services personnel who died in connection with the destruction
of the World Trade Center on September 11, 2001.
I have a deep personal interest in the subject of today's hearings,
because I am, and always will be, a New York City fire fighter. Prior
to serving as General Secretary-Treasurer for the IAFF, I was President
of the Uniformed Fire Officers Association of New York City. I have
also served as an officer for the New York City Uniformed Fire Fighters
Association, and I was a member of the Fire Department of New York for
33 years.
The second I saw the Twin Towers collapse, I knew I had lost
personal friends. We know now that 344 fire fighters and emergency
medical service personnel died in the line of duty on September 11. To
put things in perspective, the most fire fighters ever lost due to one
incident prior to September 11 was twenty-four, during an incident that
occurred more than 100 years ago. We lost so many of our members on
September 11 because they continued to enter the World Trade Center and
climb the stairs as they were trained to do even after the second
airplane struck. The number of fire fighter casualties was made even
worse because fire fighters both coming off their shifts and coming on
their shifts responded to the alarms. I am both proud and humbled to
tell you that their rescue efforts saved thousands of civilian lives.
For our New York fire fighters, it is still September 11. I cannot
find the words to describe the impact that this event has had on the
surviving members of our two New York locals and the hundreds of widows
and fatherless children that our fallen heroes have left behind.
But I can describe the enormous financial impact that this horrible
tragedy will have on the fallen fire fighters' families. Years after
the memorial services are held, hundreds of mortgages will still have
to be paid, hundreds of dependents will still need to be fed and
clothed, and hundreds of children will still need to be educated. And
this only begins to describe part of the financial needs that will
arise in the future for the families of the fallen fire fighters.
The IAFF has always played a role in assisting the families of fire
fighters who are lost in the line of duty. The sheer enormity of the
events of September 11, however, called for something more than our
traditional response. As early as the afternoon of September 11, when
we began to receive inquiries from around the world about how to assist
the fire fighter victims of this tragedy, it became apparent that we
would play a major role in managing this assistance. We decided that,
above all, we owed it to the memory of our fallen fire fighters to do
it right.
In conjunction with the Executive Boards of our two New York
affiliates, we immediately established the New York Firefighters 9-11
Disaster Relief Fund. The purpose of this Fund is to provide
humanitarian aid to the families of fire fighters and emergency medical
services personnel who died in connection with the destruction of the
World Trade Center. It is authorized to receive and distribute funds to
provide financial aid to the families of the fallen fire fighters in
meeting their living expenses, including food, housing, clothing,
medical care, education of children, transportation and other similar
expenses. These funds will go directly to the families of the fallen
fire fighters.
Working with the assistance of top-notch legal counsel from a
prominent Washington DC law firm, who donated their services on a pro-
bono basis to establish the Fund, we organized the Fund as a non-profit
charitable corporation to be governed by a six-person Board of
Directors. We were granted tax-exempt status under section 501(c)(3) of
the Internal Revenue Code on September 26, 2001, a remarkably short
period of time.
From the beginning, the Fund has abided by the highest ethical and
legal standards governing charitable fund administration. I will give
you a few examples. Out of respect for the New York fire fighters, the
Fund's Board of Directors immediately decided that the Fund would not
lend its name to any solicitation activity that even hinted at
commercial exploitation of the Fund's name, and we have decided to
employ no professional fund-raisers. As a testament to the care with
which we set up the Fund, we were pleased to learn that it was included
on several prominent internet web-sites devoted to channeling financial
assistance for September 11 victims to credible charity funds. As soon
we learned of our Fund's inclusion on these sites, we carefully
reviewed the laws of all fifty states to determine our obligations
under each state's charitable solicitation laws,and we have applied to
register the Fund in each of the states that requires charitable
solicitation registration. We also established contact with the New
York Attorney General's Office regarding its efforts to both track down
fraudulent fund raising efforts and to coordinate charitable assistance
relief for the September 11 victims.
All of our hard work has paid off. As of this morning, the New York
Firefighters 9-11 Disaster Relief Fund has raised $63 million. We have
been extremely sensitive to the need to distribute this money as soon
as possible to the families on whose behalf these funds were donated.
In fact, we have already made two distributions of $10,000 apiece to
each of the 344 families (amounting to nearly $7 million) to help meet
their immediate financial needs. We made the first of these two
distributions more than a month ago. While the Fund continues to
receive money, the Fund's Board of Directors is now developing criteria
to govern how the balance of this money will be disbursed to ensure
that the families' humanitarian needs will be met in a manner
consistent with our fiduciary duty and applicable law, including the
Internal Revenue Code.
We have also been extremely careful to ensure that the money
donated to the fire fighters' families is not wasted on unreasonable
administrative expenses. I am proud to report to this subcommittee
that, to date, less than two-thirds of one-percent of the money donated
to this Fund has been committed to administrative costs. We have been
able to keep this percentage low because so many people--both within
and outside of the IAFF--have donated so much of their time and hard
work to ensuring the integrity of this Fund. And as a 501(c)(3)
organization and a registered charity, we will submit publicly
available reports to the Internal Revenue Service and the states
detailing the amounts we have raised and paid out.
We also continue to work on a daily basis to ensure that no person
or party is using the good name of our Fund, or the logo of the IAFF,
to defraud the public in the name of our fallen New York fire fighters.
For instance, we recently shut down one fund-raiser who was soliciting
funds over the Internet in the name of our Fund into an account that
had no connection with our Fund. Relying upon the constant vigilance of
our Board of Directors, our 245,000 IAFF members, and the state
attorneys general offices, we will continue to make every effort to
ensure that no money is fraudulently raised in the name of our Fund.
My testimony here today provides only a glimpse into the efforts
that have been taken by the International Association of Fire Fighters
to address the events of September 11. Like so many other
organizations, the IAFF has worked tirelessly to respond to this
horrible tragedy. As a result of the careful and meticulous efforts of
everyone involved, the New York Firefighters 9-11 Disaster Relief Fund
will strive to meet the humanitarian needs of the families of our
fallen fire fighters with minimal administrative costs and in a
straightforward and honest manner. No fire fighter should have to think
about who will take care of his family when he is entering a burning
building to save your life. I will be happy to entertain any questions
from members of the subcommittee.
Mr. Greenwood. Thank you, Mr. Bollon. Thank you very much
for being with us and for your testimony.
Let me address a question to Mr. Amundsen and Ms. Bove--and
it is the same kind of question that I addressed to Dr. Healy
of the Red Cross. That is this: Can you assure us and the
American people that every penny of the $337 million raised so
far for the United Way September 11 Fund is in fact going to go
to the purposes for which they assumed when they wrote those
checks and put those dollars into pails, and that is to help
heal the wounds of the families who were devastated on
September 11?
Ms. Bove. First of all----
Mr. Greenwood. If you would pull that silver microphone,
particularly, is the one that is amplifying your voice.
Ms. Bove. $337 million has been pledged. Only $250 million
has been collected so far. But the September 11 Fund is
committed that every single dollar, every single penny is going
to go to the needs that were described, which is meeting the
needs of victims, families and communities affected by
September 11.
Mr. Greenwood. Now, how will you coordinate that? You were
here when we had the two other witnesses here. They received
some funds. Tell us how you are going to coordinate the $250
million or $337 million if you meet--if all of your pledges
come in. How will you--in distributing those funds to families,
what will you take into consideration? Will you take into
consideration what they have received from the Red Cross? Will
you take into consideration what they may have received from
the Firefighters Fund, from the dozens of other organizations
that are out there, from insurance, from their Federal program?
How will you coordinate what you are doing, if you would intend
to, and determine on a family by-family basis how many of these
dollars will go to specific families?
Ms. Bove. That is something that the board that was just
formed is considering how we are going to be doing that. From
the first day, we have been meeting, though, on a very regular
basis with representatives from the Red Cross, from Safe
Horizon, from Salvation Army, from the various government
agencies. From day one we have supported Eliot Spitzer's
efforts to figure out a way to coordinate it. We actually
helped find the volunteers who were putting together the
computer program to come up with the consolidated data base. So
we very much are supporting it.
I can't tell you exactly now how we are going to do it,
because there are some shifting sands. We are still finding
out, first of all, not only what all the funds out there are,
but we are also beginning to find out what all the needs are.
One of the----
Mr. Greenwood. Do you have the personnel, sufficient
personnel to review all of these claims?
Ms. Bove. We are not reviewing claims of individual
families. We are a foundation. The United Way makes grants also
to nonprofit entities. So we work through established nonprofit
entities that have both the personnel and the expertise to do
this kind of review. I am not going to become----
Mr. Greenwood. What I understand in some instances
individual families, at least my constituent Russa Steiner,
received an actual check from the United Way, and the testimony
from her attorney was that the way they understood this was
unusual. The United Way serves United Way organizations that
provides services. The United Way has not historically provided
cash payments to individuals. Is it--do you expect that this
$250 million, $337 million, that some of that money will go to
families in the direct--in the form of cash payments, or will
it only go to agencies who provide services to those families?
Ms. Bove. Well, it will go to agencies that provide cash
payments, as well as services to families. We have worked
primarily through an organization called Safe Horizon, which
was formerly Victim Services, which administers funds for crime
victims, and they have cut 15,000 checks to family, families of
victims, and they are families who are defined much in the way
that my colleague defined them, people who have lost--family
members who have lost lives of a breadwinner, people who have
lost jobs, people who have been displaced from----
Mr. Greenwood. Do you know what the range in those checks
is?
Ms. Bove. The average has been about $900 to $1,000, and
they can come back every 2 weeks up to $10,000. This was
considered a very short-term step, and we are now figuring out
what the longer term steps need to be, factoring in what are
the various other funds going to be providing and also
factoring in when regulations come out for the settlement that
we talked about earlier, the million dollars. We also want to
make sure--one possible program which isn't cash assistance
that might be very helpful that we are thinking about is some
form of case management program so that every family may have
an advocate to help them, not just today and this week but over
time, negotiate some of the various assistance.
Mental health needs, we have established--we are funding a
program that is going to help children who have lost their
primary caretaker, who lost their primary parent in the
disaster. So there are a whole range of needs that we are going
to be trying to figure out, in addition to cash to families.
Mr. Greenwood. Okay. My time has expired. The Chair
recognizes the gentleman from Michigan, Mr. Stupak, for 5
minutes to inquire.
Mr. Stupak. Thank you, Mr. Chairman. Mr. Farley, you had
indicated that you had those four commitments there that the
American Red Cross follows. One of them you said that the
donor, when they send money, they have to restrict it. Right?
Mr. Farley. I am sorry?
Mr. Stupak. That a donor when they send money through Red
Cross, they have to restrict it; otherwise, it goes in the
general----
Mr. Farley. If the donor restricts their contribution for
particular purpose, then we honor that designation, but when we
initiate a fund-raising initiative and make a case as to what
the funds are being used--what the need is, the funds that we
received, we presume that because the donor has responded to
that without condition, it would be used for that purpose.
Mr. Stupak. Did you in any of your advertising on the heels
of September 11 tell donors that they should restrict their
funds if they did not want--if they want it to go just to
victims or if you want it to go to the anthrax scare or nuclear
scare or telephones, whatever it might be?
Mr. Farley. No, we did not.
Mr. Stupak. So how would a donor know that?
Mr. Farley. The donor would only know what we have stated
publicly about what the uses of--or contributions would be
extended to, and we--of course at that point, you know, we
didn't really know where this was going. We wanted to obviously
respond to the victims, but we wanted to do whatever we needed
to do to be there in the event that, you know, more incidents
ensued. So I think the presumption was in receipt of a gift
from a donor based on an appeal, be it through a PSA or
whatever, when we said to support the victims of this terrorist
attack and other emerging needs, or however that was framed,
that when we received a gift, that we presume that that was the
purpose for which it was given, and it was a signal to us that
it should be expended in that manner. At the same----
Mr. Stupak. I think in your testimony you said $120 million
has gone out. So there is probably about $400 million still
sitting there?
Mr. Farley. There is about--we have expended about $155
million. Of that, $120 million of it has gone to direct victim
assistance of one kind or another. We have identified a total
of about $300 million in needs that we anticipate to come into
play in response to this disaster. So that leaves a balance of,
say, $264 million.
Mr. Stupak. What is the $300 million anticipated?
Mr. Farley. That is for increased disbursements of funds to
victims. It is for the cost----
Mr. Stupak. How much of that 300 is for increase for
victims?
Mr. Farley. How much of that is for----
Mr. Stupak. Victims, yeah. Is it in your testimony? I
didn't see it there.
Mr. Farley. The anticipated amount for the immediate relief
we think would be about $209, $210 million for direct victim
assistance.
Mr. Stupak. Of that $300, two-thirds will go----
Mr. Farley. Correct.
Mr. Stupak. And what about the roughly $110 something
million left? What would the other go for?
Mr. Farley. The other would be used for developing the
support for the military personnel. We have a Congressional
obligation to provide emergency service communications to our
military families. Now, with mobilization into a war, we have
an increased responsibility with that, with the mobilization of
our service personnel. We have anticipated services from our
chapters to provide mental health counseling and information on
issues such as anthrax, and we also have direct costs
associated with the provision of those services that provide
the 1-800 numbers for victims to call in to find out what
agencies they could connect to, and if there is any relocation
or reunification of families of victims, those are included in
that.
Mr. Stupak. A suggestion, if your fourth commitment is to
make sure that you honor the intent of the donor, I suggest you
make it very clear in your advertisement what you are going to
use the money for. If people after they are watching this
hearing, if they realize that there is about $540 million that
was sent in and only $120 million has been put out in direct
aid, people will be shaking their heads saying, boy, how do we
get a refund. That is why--anyways.
Mr. Farley. I think if--Congressman Stupak, if we were to
ask a donor, is it appropriate for us when we have learned that
there has been an anthrax attack to provide information to
communities about that, or if we are asked should we provide
particular kinds of support for response personnel, first
responders, which all leads toward support of victim recovery,
I think the logic of that would be, yes, that would be an
appropriate use.
Mr. Stupak. Well, I am not too sure of that.
Mr. Farley. Okay.
Mr. Stupak. I am sure they probably asked for some time
lines. This is a war? You know, Congress made it very clear
this was not a war. This was an authorization of a use of
force, because if we use the term ``war,'' and one reason why
we did not want to do a declaration of war, then all the life
insurance policies would not have to be paid if that is a
declaration of war. So to help protect those victims, we did
not want to do that. So it brings me a little concern when you
keep saying war.
Mr. Farley. Congressman, one point, if I might----
Mr. Stupak. I will let you go as long as you want, as long
as the chairman----
Mr. Farley. Let me make two points. First of all, I was the
individual greeted by your constituents.
Mr. Stupak. I have a glossy of you.
Mr. Farley. And you can see I have changed greatly since
that moment of several weeks ago. I would like to say, though,
that of the balance of those funds, the $264 million that we
have not accounted for in terms of expending where that would
be expended, I want to point out that that is--those are
resources that we anticipate a portion of which will be needed
for direct victim support in the weeks and years ahead because
of our experience with other tragedies, and we think it
incumbent on the Red Cross to ensure that we have the capacity
to respond to those needs years later as a result of this
tragedy. So in part, those funds will be used for that purpose.
Mr. Stupak. Well, you saw the reaction, they didn't see it
that way.
Mr. Greenwood. The Chair recognizes the chairman of the
full committee, Mr. Tauzin, for 5 minutes.
Chairman Tauzin. Thank you, Mr. Chairman. Let me follow up
on Mr. Stupak's line of questioning, gentlemen, and I want to
read you two statements you made about Liberty Fund and ask you
if you don't think they send a very different message. The
statement in your testimony today is that ``Therefore, we
established the Liberty Disaster Relief Fund, a separate and
segregated account. It was created to hold and disburse funds
related to the September 11 attacks, its aftermath and other
terrorist events.'' That is your statement today.
Now, I want to read you the definition of the Liberty Fund
found on the Internet when it was announced, and here is the
paragraph. ``For this reason, we have created a special fund,
the Liberty Disaster Fund. This is a designated disaster relief
fund separate and distinct from the Domestic Disaster Relief
Fund and the International Relief Fund. The Liberty Disaster
Fund will support the immediate and emerging efforts of the
American Red Cross to alleviate the human suffering brought on
by the attacks of the September 11.''
Is there a difference in those two statements?
Mr. Farley. They would suggest that there is a need for
further clarity, but I would say that if we were to ask that if
the Liberty Fund were to be used to provide support for an
integrated response to these kinds of activities, would it not
meet the tests of common sense that 6 weeks, 6 months hence
from now if we have another kind of an incident resulting from
a terrorist act----
Chairman Tauzin. Well----
Mr. Farley. It would be prudent for us to use the funds in
that manner.
Chairman Tauzin. Then why didn't you announce on October 31
that the American Red Cross had raised enough money to help the
victims of the terrorist attacks and will stop asking for
donations? Do you have some prior knowledge as to how many new
terrorist attacks that there are going to be that you can
announce this in advance?
Mr. Farley. Obviously not.
Chairman Tauzin. No, you don't. You see, here is the
problem in communication. The problem in communication that Mr.
Stupak pointed out is that when you created the fund, you very
clearly talked about an event, the September 11 event is the
genesis for this fund and the need for Americans to respond as
generously as it had to the victims of this disaster of
September 11 in these three cities. The fact that you say you
have enough money in the fund now to take care of these
victims, that you no longer collect money into this fund seems
to bolster that position that it was strictly for these victims
and, therefore, the fund is adequate now and you can move on to
some other important Red Cross initiatives. But then we learn
that you really are putting some of this money into other Red
Cross initiatives, telecommunications upgrades, blood bank,
anthrax, mental health response. I mean, no one is going to
quarrel with you that these are important human needs that the
Red Cross traditionally responds to. The concern is for the
families who are obviously victimized on September 11, that
America responded generously to the tune of $540 million for
them, and now it is going for other important Red Cross needs
for, perhaps, other people, other victims or other important
strategic or logistical needs of the Red Cross.
When the Better Business Bureau did a survey to see what
people's intent were when they gave, the surveys came back that
the vast majority of people donating expect the money to be
used for the current tragedy, the current problem, not to be
put in reserve accounts for future problems, and that unless
you very clearly specify that you are going to put some of the
donations into reserve accounts, that Americans expect you to
use it for those victims, the present victims, the ones we know
about, the ones we saw and see every day as we look at this
tragedy of September 11 and its aftermath, the victims we saw
here today at this table.
There is a disconnect here, and I know I sounded hard a
while ago, but I think the representatives of the New York
Attorney General's office sounded equally hard about this. If
there is an expectation that you created by not being too
specific, by saying this was a September 11 event fund, that
this money should go to these victims, and you now say that you
want to use it for other purposes, you have created a
disconnect. And I think that is damaging to the good faith that
exists between the incredible giving heart of America and
agencies such as yours that do so much good in using that money
to help victims. And I think there is some damage done here,
and I hope you would help repair it in some way.
Mr. Farley. Congressman, we will pay close attention to our
messaging on this, and I think you raised a good point.
Obviously if we solicit funds with the public understanding one
thing and then in fact we do something else, it is against the
public trust for what we have initiated. But I would like to
clarify a couple items about timing and messaging, if you will.
The original announcement of the American Red Cross about
how the funds would be used was developed in a September 20
communication that was sent out to all of Red Cross units and
put on our Web site, and in that document it talks about the
uses and intents for the Liberty Fund. And while the media had
reported on October 29 that only a portion of the funds would
be designated this some way or another, in fact, on October 12
we communicated again what the intent would be for the Liberty
Fund. And I think it is important to think about the snapshot
in time when that October 12 communication was sent. At that
time we said--and you rightly pointed out, Congressman Tauzin,
with the previous panel that we said we would need about $300
million to meet--to respond to the needs that we see then. At
that moment, we had raised about $375 million. So we thought at
that point, not knowing where we were going with the nature of
the event and how the public would respond to that in the weeks
ahead, that that would be a prudent allocation to support the
needs of the victims, with anticipating that events beyond,
that there are going to be some needs for the future. So
unfortunately the understanding apparently about what we were
doing and what we intended to do with that fund may not have
been as clear as it could have been. But the intent at the Red
Cross and its messaging as early as September 20 clearly stated
that the fund--the Liberty Fund, which was designated in a
restricted account, would be used for those many purposes that
you have cited.
Chairman Tauzin. I just want to point out to you, you have
two groups of people that I think ended up confused. The first
was the donors who thought from your early message that all
this money was going to go to the victims we saw on September
11, and, second, the victims and their families. It was assumed
that all this money was going to be raised to help them out,
and now we learn that there are limits on the help that is
coming, because the money may go to other purposes.
Neither one of those results is very good. And despite all
the great work you do and all the good you do, again, I would
urge you to rethink, perhaps, how you handle this.
Mr. Chairman, I know my time is up, but I think we ought to
see the chart for what it is worth. It is a chart we have that
indicates the organization, the amount raised and the amount
disbursed to date, and it gives a quick snapshot of all the
monies that are being raised by the major organizations, and
the disbursements as of this date as we have them. I think it
is fairly accurate. The staff has tried to be as up to date as
they could with it, and it indicates obviously that all the
organizations that are raising money for the victims of the
September 11 event have some way to go before all those monies
are properly disbursed.
Recognizing all the logistical problems and all the
difficulties in doing it, obviously, again, the enormous
generous heart that America has shared with all of you who
serve as intermediaries for the gifts, is anxious to see that
the true beneficiaries of those gifts receive them at some
point in the not too distant future.
Thank you very much, Mr. Chairman.
Mr. Greenwood. The Chair recognizes the gentleman from
Florida, Mr. Deutsch, the ranking member, for 5 minutes.
Mr. Deutsch. Thank you, Mr. Chairman. I would like to
submit, of all things, a Sunday story from the New York Post,
and the headline is Families Struggle to Get Funds. I mean, so
very time appropriate. And I will read one short comment from
Janet Collado: ``It's depressing. You start feeling that it's
more of a handout,'' who's been trying to help her Spanish-
speaking sister-in-law.
And so, Mr. Chairman, if we can just include that.
Mr. Greenwood. Without objection, the New York Post article
will be included in the record.
[The article follows:]
[Sunday, November 4, 2001--Daily News]
Families Struggle to Get Funds
CHARITIES FACE WOES
By Heidi Evans, Daily News Staff Writer
Hubert Hinds has never asked for anything in his life.
But now that his wife, Clara, a beloved seamstress at Windows on
the World, has been buried, and with his savings virtually gone, the
57-year-old Far Rockaway man is about to enter the black hole of
philanthropy.
When he steps into the white tent of the Family Assistance Center
on the Hudson River and 55th St. tomorrow, Hinds will encounter a
bewildering network with links to almost 200 charities and more than $1
billion donated to help families hurt by the Sept. 11 attack.
Hubert Hinds holds a picture of his wife, Clara, who was killed
while working at Windows on the World. ``I was told there are lawyers
down there to advise me on what can be done. I really don't know,''
said Hines. ``You hear all the stories.''
Nearly two months after the attack, with money still pouring in to
charities large and small, there is no simple way for victims' families
to apply for the full range of benefits and services available to them.
Relatives and friends of the grief-stricken go from one agency to
another, sometimes spending morning and night at the pier or on the
phone in an effort to get help. It is a bureaucratic nightmare for both
the families and groups trying to do the right thing.
``It's a runaround. It's depressing. You start feeling that it's
more of a handout,'' said Janet Collado, who has been trying to help
her Spanish-speaking sister-in-law, Sandra Petrocino, get psychological
and financial help as well as visas to allow her parents to come from
the Dominican Republic to help take care of her and her two kids,
Keyla, 10, and Alex, 5.
Central Register Eyed
Petrocino's husband, Manuel, a kitchen worker at Windows on the
World, died in the Sept. 11 attack.
``The one question I hear from a lot of families is: ``Where do I
start? They always had that one person to lean on,'' said Collado.
Sandra Petrocino, with children Alex and Kayla, mourn Manuel, also
a Windows on the World employee.While steps are being taken to organize
this unprecedented charitable effort, the undertaking is immense. On
Friday, Attorney General Eliot Spitzer announced that a group of major
technology and consulting firms agreed to set up a centralized registry
to keep track of giving and reduce duplication of services and fraud.
The agencies, including the Red Cross and The Twin Towers Fund, will
share access to a single database.
The idea is modeled on the one used in the aftermath of the
Oklahoma City bombing in 1995, which kept tabs on each of the 168
families, what they needed and what they had been given. Each family
also was assigned a caseworker to check on them several times a year
and be their advocate.
But it will be at least another month before the database is up and
working in New York, Spitzer said, leaving people to continue to go
from place to place on their own.
In the meantime, there is growing pressure from donors to make sure
the extraordinary amount of money collected is going to the families of
an estimated 5,000 victims.
`Huge Dilemma'
``The public needs to understand that we are creating something out
of nothing,'' said David Campbell, a vice president at the Community
Service Society of New York, which is counseling the families of
restaurant workers killed in the attack.
The 150-year-old society also is advising the trustees of the
Windows of Hope Family Relief Fund, which already has collected more
than $2.1 million to benefit the 250 food service workers killed in the
attack, including those who worked at Windows on the World.
``You can't create an accountable system overnight. It's a huge
dilemma,'' Campbell said. ``If you give it away too fast, you could
give it to the wrong people. And if you delay, you run the risk of
being seen as unresponsive. It's sort of a `lose-lose' situation.''
For the families of the 73 people who worked at the Windows on the
World restaurant on the 107th floor, where dishwashers made as little
as $8 an hour, there are particular hardships, as well as for the
groups that want to help them.
Several of the kitchen workers were the sole source of support for
their spouses, many of whom are undocumented. Many workers also left
behind--and supported--children who live in other countries. These
families are afraid to come forward, worried they will be hounded by
immigration officials.
``It's a mess,'' said one charity official who asked not to be
named.
More Than Just Money
Helping victims of the World Trade Center attack is not just about
handing out money, some disaster experts say. And big relief
organizations such as the Red Cross--which has collected an astounding
$547 million for the World Trade Center families--will need to adapt to
the unique set of circumstances.
Nancy Anthony, a key player in organizing the relief effort for
Oklahoma City, said charitable groups will perform a greater service if
they help people here plan for the next five years of their life,
rather than getting them through just the next six months of paying
bills.
``This is not like a flood or hurricane, where people need pots and
pans and towels,'' said Anthony, referring to the typical Red Cross
disaster. ``In New York, like we had in Oklahoma City, you have
incredible emotional devastation. People are going to have long-term
mental health issues.
``When you look back, you don't want to say you did a good job
because you handed out the money; a bank could have done that. It's
because you helped people restore their lives, helped them to be
independent, to be survivors and to go forward with their lives.''
Mr. Deutsch. You know, I just want to mention just a--in
the previous panel, I talked about, you know, my experience in
south Florida with Hurricane Andrew, and I want to speak
specifically about the Red Cross, I mean American. Literally,
it is one of these incidences that I will remember the rest of
my life, that I went down to basically what was Ground Zero, a
different Ground Zero at that time, the day after Hurricane
Andrew. And if people remember that incident, President Bush
came down, but he didn't go far enough, and the reality is that
the Red Cross was there literally before the National Guard, I
mean the day after Hurricane Andrew, and they were feeding
people who didn't have food and didn't have water before there
were any governmental entities there. I mean, I will remember
it like it is today, and they had the trailer out, providing a
service literally before the National Guard, and eventually, if
we recall Hurricane Andrew, the Army ended up having to come
down. The National Guard was not significant enough, and they
actually called out the Army to provide housing and food and
kitchen service during Hurricane Andrew.
So I think that--you know, as one community who has
benefited directly from the good works of the Red Cross, I
think it is significant just to understand in a broad scale day
in and day out, year in and year out the good works that the
Red Cross has done.
I want to ask, I guess, two really general questions and
give everyone on the panel an opportunity to respond to this.
One of the things I am concerned about is that the public may
take away a wrong message from these hearings. Clearly, we
don't want the public to think that most of these charities are
operating inefficiently or are even engaging in wasteful
activities. In fact, they are not. Therefore, I would like to
ask you to tell me what you think the main message to the
public should be regarding these charities. What is the message
that should be coming from this hearing, in other words? I
mean, for each of you if you want to respond to that, what
would you hope that--I assume we are on C-SPAN, people are
watching this, reporters who covered this hearing. What do you
think the message should be of this hearing?
Mr. Bender, if you want to take a shot.
Mr. Bender. Sure. I think the message is that--two things.
One is that the charities, the Red Cross and the other
charities mentioned here and some that aren't mentioned here,
are really on the ground doing a job, and it is an important
job, and you just mentioned that, and I think that is an
important message that the public understand and, second, that
I think this whole issue of trust and restoring--having trust--
the public having trust in the institutions that in fact are
trying to provide the relief is very, very important. And if we
can build, and rebuild if we need to, that trust, I think that
is absolutely essential for the success of our organization and
the others that are really trying to perform the service.
Mr. Amundsen. I think as we look at this tragedy, as far as
from the United Way of America standpoint, this is representing
all United Ways across the country. United Way and United Way
organizations are on the ground in every community
understanding the impact of this tragedy in all communities. We
are working with the agencies to provide the services necessary
to help people cope with the changing nature of the world, to
address the needs of victims and families, some of that through
the September 11 Fund, but even in their own local community
with the ripple effect of the devastation that has happened in
the tourism and the airline industries. We are there. We will
be there 365 days a year to help address that issue in those
local communities, and we do so in an effective way. And it is
clearly determined by the needs of the community and the
volunteers in the community to truly understand the needs so
that the money goes directly to those needs and that the
appropriate people are served.
Mr. Deutsch. Thank you.
Ms. Bove. I guess a message that I think is important to
get out is that victims and families' emergency needs are being
met and have been from the first weeks, that nonprofits have
done quite a remarkable job of mobilizing quickly, and the
point that some of you made earlier, with very, very little
fraud and abuse. And I think that is an important message to
get out. More than a million people donated to the September 11
Fund, because the New York Community Trust and the United Way
have decades of experience sorting out how do you identify
unmet needs and apply the money effectively, and the message
that needs to get out is that we will continue to use that
expertise in a way to make sure that the funds entrusted to us
are spent to meet not only the immediate emergency needs but
the longer term needs that are left in our community.
Mr. Bollon. Part of the discussion today of the percentage
of money that has been raised, it is the greatest amount that
was ever raised by this country, but we are not looking at also
the percentage of people we lost. We lost more people here than
we lost at Pearl Harbor. I lost 340 firefighters, 15 percent
more than I ever lost before. The same way with the civilians
and the police department and everybody else. We should have
raised that much money, because of the incident.
And I am a little confused. The chairman when he was asking
his questions on the 5 minutes asked of Ms. Bove, was she going
to take into consideration what was given to the firefighters
when she is considering how much--how to disburse her money.
What does that mean, that I am going to be penalized now
because I did everything that this committee is looking for? We
started the fund right away as a charitable fund, as a
501(c)(3). We have filed for all the State associations. We got
the first distribution right out there. And because we are
doing everything right and held costs down to three-eights of 1
percent, we may now be penalized and get less because we have
given that money out to our people, if we have done that, and
that is a little confusing. That sends the wrong message to me,
I think, and maybe I misunderstood.
Mr. Greenwood. The time of the gentleman has expired. If I
can clarify, it was not--that was not an advocacy question on
my part. I was not advocating that. I was just trying to
determine the methodology of the various charitable
organizations.
Mr. Bass, do you wish to inquire?
Mr. Bass. No, I don't, Mr. Chairman. I just wish to
associate myself with the concerns of the distinguished
chairman of the committee who asked questions a few minutes
ago, and I will yield back.
Mr. Greenwood. Mr. Whitfield, do you care to inquire? I
think in the interest of time, we are trying to wind down, and
we thank you for your patience. You have been here for 4 hours.
We thank you for that. Thank you for your testimony, and we
thank you for the extraordinary good work that you are doing on
behalf of the American people, and we hope you will keep it up.
Thank you again.
We now call the third panel, consisting of Mr. J. Howard
Beales, III. He is the Director of the Bureau of Consumer
Protection for the Federal Trade Commission. And Mr. H. Art
Taylor, President and CEO of the Better Business Bureau Wise
Giving Alliance.
Mr. Beales and Mr. Taylor, gentlemen, welcome, and let me
thank you for your forbearance and apologize for the lateness
of the hour and express the appreciation of the committee for
your appearance before us.
And Mr. Beales, if you will begin. You are recognized for 5
minutes to provide your testimony.
TESTIMONY OF J. HOWARD BEALES, III, DIRECTOR, BUREAU OF
CONSUMER PROTECTION, FEDERAL TRADE COMMISSION; AND HERMAN ART
TAYLOR, PRESIDENT AND CEO, BETTER BUSINESS BUREAU WISE GIVING
ALLIANCE
Mr. Beales. Thank you, Mr. Chairman.
Mr. Greenwood. And if I may ask you to point that silver
microphone right to you and have it as close to your mouth as
you can get it, that is great.
Mr. Beales. Thank you, Mr. Chairman, and members of the
committee. I am Howard Beales, the Director of the Bureau of
Consumer Protection of the Federal Trade Commission. I
appreciate the opportunity to appear before you to testify on
behalf of the Federal Trade Commission regarding fraudulent
solicitations of charitable contributions. I would request that
the Commission's entire written statement be included in the
record of this hearing.
Charitable organizations play an invaluable role in our
society, providing help and assistance to millions of Americans
in times of need, tragedy and disaster. In the wake of the
September 11 terrorist attacks on the United States, charitable
giving has provided the citizens of this country, both young
and old, a unique, tangible opportunity to demonstrate both
support for the victims of the attacks and the unity of the
American people. Millions of Americans have responded with an
outpouring of generosity. Unfortunately, consumer protection
agencies are only too familiar with the risk of fraudulent
fund-raising in the aftermath of such tragedies. This type of
fraud is especially pernicious. It not only preys upon the
donor, but ultimately injures many others by undermining the
public's confidence in legitimate charitable fund-raising.
The Federal Trade Commission, in cooperation with numerous
other Federal, State and local consumer protection agencies,
has pursued a three-part strategy to protect American consumers
against fraud. First, we are monitoring developments closely
and systematically to identify possible law violators and
sharing intelligence with other law enforcers. Second, we are
prepared to act quickly and effectively if violations are
found. And third, we are educating consumers and businesses
about how to spot potentially fraudulent solicitations.
Immediately after September 11, the Commission began to
monitor on a systematic basis consumer complaints, tips from
other law enforcers and watchdog groups and media reports about
possible charity fraud and related scams. A central part of the
Commission's monitoring effort is Consumer Sentinel, a Web-
based consumer complaint data base and law enforcement
investigative tool. To facilitate the complaints, the
Commission maintains both a toll-free number, 1-877-FTC-HELP,
and an electronic complaint form at www.ftc.gov. Consumer
Sentinel also receives complaints from many public and private
partners, including the 64 local offices of the Better Business
Bureaus across the Nation, offices of numerous States Attorneys
General, the National Consumers League and Project PhoneBusters
in Canada. Between September 12, 2001 and October 25, Consumer
Sentinel received 193 disaster-related complaints, only 24
percent, or 46, of which related to charitable solicitations.
We have followed up on every complaint, searching for likely
scams and have worked with agents and investigators from a
number of other agencies and organizations, including the
Secret Service, FEMA, and the Red Cross in investigating those
cases that looked genuinely problematic. We have found that to
date the instances of fraud are few and far between, and we
continue to monitor this situation as aggressively as any we
have ever pursued.
In addition to monitoring potential frauds, we have worked
hard to educate consumers.
On September 20, our Northeast regional office, which is
located only six blocks from the World Trade Center, held a
press conference in New York City, with city, State and Federal
agencies and nonprofit organizations, to announce a coalition
to protect New York consumers and provide essential information
during this time of crisis. The Northeast region staff
distributed a new consumer alert, ``Helping Victims of the
Terrorist Attacks: Your Guide to Giving Wisely,'' which was
also posted on the FTC Web site. In a little over a month, this
publication has been accessed almost 10,000 times.
The Commission has also developed a dedicated Web page
where consumers and businesses can get more information about
donating wisely and filing a complaint and a banner ad that
promotes the site. In addition to our work on potential
charitable giving frauds, we are also actively monitoring the
Internet to detect a host of other potential September 11th-
related frauds, including items like home testing kits for
anthrax, gas masks and antibiotics. As is the case with
charitable fraud, deception in these areas poses substantial
risk to consumers and will be a top priority for the Commission
and other consumer protection agencies.
In conclusion, I would say that so far, it appears that
consumers have generally shown themselves to be both generous
to real charities and aware of the potential for con artists
posing as fund-raisers. To consumers I would say, continue to
give wisely. If you see or suspect fraud or deception in this
or any other area, please contact us at 1-877-FTC-HELP.
In contrast, to con men or scam artists I would simply say
don't go there. You will be detected, and there are an array of
Federal, State and local law enforcement agencies anxious to
take aggressive action against you.
I would be pleased to answer your questions.
[The prepared statement of J. Howard Beales III follows:]
Prepared Statement of J. Howard Beales III, Director, Bureau of
Consumer Protection, Federal Trade Commission
Mr. Chairman and members of the Committee, I am J. Howard Beales,
III, the Director of the Bureau of Consumer Protection of the Federal
Trade Commission. I appreciate this opportunity to appear before you
today to testify on behalf of the Federal Trade Commission regarding
fraudulent solicitations of charitable contributions, especially
solicitations relating to the recent September 11th
tragedies.1
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\1\ The views expressed in the prepared statement represent the
views of the Commission. My oral statement and responses to any
questions you may have, however, are my own and do not necessarily
reflect the views of the Commission or any individual Commissioner.
---------------------------------------------------------------------------
I. INTRODUCTION AND BACKGROUND
The Commission recognizes the important role that charitable
organizations play in providing valuable services, a role that has
become even more critical in the wake of the September 11th attacks.
Solicitations for charitable organizations, and corresponding
donations, have increased noticeably in recent weeks. So, too, have
concerns about possibly fraudulent solicitation schemes seeking to
exploit the overwhelming urge of the American public to aid victims of
September's tragedies. The Commission has examined every complaint,
inquiry, and press report raising any suggestion of such fraud. In
addition, the Commission has surfed the Internet, reached out to other
law enforcement agencies and watch-dog groups, and actively sought out
potential fraudulent solicitors. To date, the findings of fraud are few
and far between, and the Commission continues to monitor this situation
as aggressively as any the Commission has ever pursued. Furthermore,
the Commission has stepped-up efforts to educate consumers and
businesses about how to spot potentially fraudulent solicitations.
Unfortunately, but not surprisingly, the potential for fraudulent
fundraising may escalate in the aftermath of national tragedies,
natural disasters, local calamities, and the like. Fraudulent
solicitors, who prey upon a donor's charitable instinct, may deceive a
donor about who they are and what they do with the funds they raise.
The scam artists ultimately derail donors' charitable intentions,
undermine the public's confidence in legitimate charitable fundraising,
and, in turn, injure those legitimate nonprofit organizations that
compete for a depleted pool of charity dollars. The Commission, which
is the federal government's principal consumer protection agency,
shares the Committee's deep concern over possible deceptive or
fraudulent charitable solicitations.
Charitable organizations are closely regulated by the states. Most
state governments implement detailed registration and reporting
requirements that are crucial to the effective oversight of charities.
Under the Federal Trade Commission Act (``FTC Act''), the agency's
mandate is to take action against ``unfair or deceptive acts or
practices'' that are ``in or affecting commerce.'' 2 The FTC
Act also equips the FTC with a wide array of tools to enforce this
mandate.3 But Sections 4 and 5 of the FTC Act provide the
Commission with jurisdiction over corporations only if organized to
carry on business for their own profit or that of their
members.4 Over the years, federal courts have construed
Section 4 to bar the Commission from suing any truly nonprofit
organization under the FTC Act, thereby removing many charitable
organizations from the FTC's scope of authority.5
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\2\ 15 U.S.C. Sec. 45(a). The Commission also has responsibilities
under more than 45 additional statutes, e.g., the Fair Credit Reporting
Act, 15 U.S.C. Sec. Sec. 1681 et seq., which governs the privacy,
fairness, and accuracy of certain sensitive consumer information; the
Truth in Lending Act, 15 U.S.C. Sec. Sec. 1601 et seq., which mandates
disclosures of credit terms; and the Fair Credit Billing Act, 15 U.S.C.
Sec. Sec. 1666 et seq., which provides for the correction of billing
errors on credit accounts. The Commission also enforces over 35 rules
governing specific industries and practices, e.g., the Used Car Rule,
16 C.F.R. Part 455, which requires used car dealers to disclose
warranty terms via a window sticker; the Franchise Rule, 16 C.F.R. Part
436, which requires the provision of information to prospective
franchisees; and the Telemarketing Sales Rule, 16 C.F.R. Part 310,
which defines and prohibits deceptive telemarketing practices and other
abusive telemarketing practices.
\3\ These include the authority to file civil actions in federal
district court, as well as to bring administrative cease and desist
actions, against those who engage in deceptive practices. The FTC Act
also enables the Commission to obtain a full range of relief for
injured consumers. Typically these civil actions seek preliminary and
permanent injunctions to halt the targeted illegal activity, as well as
redress for injured consumers.
\4\ Section 5(a)(2) of the FTC Act states:
The commission is hereby empowered and directed to prevent persons,
partnerships, or corporations . . . from using unfair or deceptive acts
or practices in or affecting commerce. 15 U.S.C. Sec. 45 (a) (2).
Section 4 defines ``Corporation'' to include: any company, trust,
so-called Massachusetts trust, or association, incorporated or
unincorporated, which is organized to carry on business for its own
profit or that of its members . . . 15 U.S.C. Sec. 44.
\5\ See Community Blood Bank of Kansas City, Inc. v. FTC, 405 F.2d
1011 (8th Cir. 1969).
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However, the Commission does have jurisdiction over a nonprofit
organization that is merely an instrumentality or a shell used to seek
direct monetary gain, either for itself or for its members.6
The Commission also has jurisdiction under the FTC Act over entities
that are organized to carry on business for the profit of their
members. These entities include for-profit telemarketers, sometimes
referred to as ``telefunders,'' that contract with nonprofit
organizations to perform the nonprofits' fundraising
activities.7 The Commission has used this jurisdiction
aggressively to attack instances of fraud.
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\6\ Community Blood Bank, 405 F.2d at 1019; Ohio Christian College,
80 F.T.C. 815 (1972).
\7\ See FTC v. Saja, 1997-2 Trade Cas. (CCH) para. 71,952 (D. Ariz.
1997). Cf. California Dental Ass'n v. FTC, 526 U.S. 756 (1999).
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The recently-enacted USA PATRIOT ACT of 2001 provides the FTC with
an additional tool to address charitable fraud.8 The USA
PATRIOT law amends the statute authorizing the FTC's Telemarketing
Sales Rule (``TSR'') to apply to certain telemarketing activities,
including the solicitation of charitable contributions. The Commission
is currently considering proposed amendments to the TSR that will
implement this new authority.
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\8\ USA PATRIOT Act, Pub. Law No. 107-56, Sec. Sec. 6102(a)(2),
(3)(D), 6106(4), ____ Stat. ____ (2001).
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In addition to the statutory limitations on Commission jurisdiction
over some charities, there are also constitutional limitations. The
Supreme Court has held that fundraising for charities is fully
protected speech under the First Amendment and that state statutes may
not require a charity to prove the reasonableness of using more than 35
percent of its collected donations for fundraising
expenses.9 Nor can state statutes require fundraisers to
disclose the percentage of donations the fundraisers keep.10
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\9\ Riley v. National Fed'n of the Blind of N. Carolina, 487 U.S.
781 (1988).
\10\ Riley, 487 U.S. at 800.
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Against this background to the regulation of charities, the
Commission now addresses your particular concern about fraudulent
charitable solicitations, especially those relating to the tragedies of
September 11th. The need--and challenge--for law enforcement here is
three-fold: (1) to monitor developments closely and systematically so
as to swiftly identify possible law violators, sharing that
intelligence with other law enforcers; (2) to act quickly and
effectively if someone violates the law; and (3) to educate consumers
and businesses about how to spot potentially fraudulent solicitations,
hopefully minimizing the extent to which deception of contributors will
occur. As set forth below, on the heels of September 11th, the
Commission set up a disaster scam project to accomplish these important
tasks.
II. THE COMMISSION'S EFFORTS TO IDENTIFY FRAUDULENT CHARITABLE
SOLICITATIONS AND OTHER DISASTER-RELATED SCAMS
Immediately after September 11th, the Commission stepped-up its
monitoring, on a systematic basis, of consumer complaints, tips from
other law enforcers and watch-dog groups, and media reports about
possible charity fraud and related scams. The Commission reviewed each
one and continues to do so today. In addition, the Commission has
surfed the Internet, reached out to other law enforcement agencies and
watch-dog groups, and actively sought out potential fraudulent
solicitors. There has been some media coverage warning that scam
artists may try to take advantage of consumers' desire to help victims
of the attacks. The Commission has not discovered any widespread
problem but continues actively to monitor this area.
A. Consumer Sentinel
A central part of the Commission's monitoring effort is Consumer
Sentinel, a web-based consumer complaint database and law enforcement
investigative tool that the Commission uses to identify targets for
investigation.11 Consumer Sentinel receives complaints and
inquiries about all sorts of transactions, including charitable
solicitations. The complaints come into Consumer Sentinel from a
variety of sources, including from the FTC's Consumer Response Center
(``CRC''), which processes both telephone and mail inquiries and
complaints.12 For those consumers who prefer the online
environment, an electronic complaint form at www.ftc.gov, available
since May 1998, permits consumers to channel information about
potential scams directly to the CRC and the fraud database.
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\11\ See www.consumer.gov/sentinel.
\12\ The CRC now receives over 12,000 inquiries and complaints per
week. They cover a broad spectrum--everything from complaints about
get-rich-quick telemarketing scams and online auction fraud, to
questions about consumer rights under various credit statutes and
requests for educational materials. Counselors record complaint data,
provide information to assist consumers in resolving their complaints,
and answer their inquiries.
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Consumer Sentinel also benefits from the contributions of many
public and private partners. It receives data from other public and
private consumer organizations, including 64 local offices of the
Better Business Bureaus across the nation, offices of numerous state
Attorney's General, the National Consumers League's National Fraud
Information Center, and Project Phonebusters in Canada.
The Commission provides secure access to this data over the
Internet, free of charge, to over 300 U.S., Canadian, and Australian
law enforcement organizations--including the Department of Justice,
U.S. Attorneys' offices, the Federal Bureau of Investigation, the
Securities and Exchange Commission, the Secret Service, the U.S. Postal
Inspection Service, the Internal Revenue Service, the offices of all 50
state Attorneys General, local sheriffs and prosecutors, the Royal
Canadian Mounted Police, and the Australian Competition and Consumer
Commission.
Consumer Sentinel first went online in late 1997. Since then, the
Commission has upgraded the capacity of the Consumer Sentinel database
and enhanced the agency's complaint-handling systems by creating and
staffing a new toll-free consumer helpline at 1-877-FTC-HELP, and
adding several new functions to Consumer Sentinel. In 2000, Consumer
Sentinel received over 100,000 consumer complaints. Currently the
database holds over 300,000 consumer complaints.
Significantly, the Consumer Sentinel database is fully searchable.
This search feature enables users to search the entire database, using
certain key words, to identify specific types of complaints or
complaints against specific entities. For example, an investigator can
search for the term ``disaster'' or ``September 11th'' and cull
specific disaster-related complaints. The database also features a
specific identification code that enables users to sort complaints
specifically involving charitable solicitations.
Since the September 11th events, the Commission has closely and
systematically monitored disaster-related and charitable solicitation
complaints in the Consumer Sentinel database and followed up on any
potential leads. Between September 12, 2001, and October 25, 2001,
Consumer Sentinel received 193 disaster-related complaints, 24 percent
of which related to charitable solicitations. The vast majority of
complaints has been from consumers alerting the Commission to potential
scams, not complaining about being defrauded. The Commission has
followed up on likely scams and has worked with agents and
investigators from a number of other agencies and organizations,
including the Secret Service, FEMA, and the Red Cross, in investigating
those cases that look genuinely problematic.13
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\13\ The number of complaints the Commission has received is lower
than might be expected. This might be in part due to the fact that
victims of fraudulent solicitations often do not know that they have
been scammed and therefore do not file complaints. It might also be in
part due to the Direct Marketing Association's request that its members
that engage in charitable fundraising, and that solicit people and
businesses with whom they do not have a previously existing customer
relationship, cease outbound telemarketing fundraising through the end
of September. The announcement about this directive can be found at:
http://www.the-dma.org/cgi/dispannouncements?article=115.
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In addition to monitoring Consumer Sentinel for complaints about
fraudulent fundraising, the Commission has also monitored the database
and actively surfed the Internet for other related consumer frauds. For
example, the FTC has seen an increase in the number of entities
marketing bioterrorism-related products. These include everything from
dietary supplements sold as effective treatments against anthrax or
small pox, and home testing kits for anthrax, to gas masks and water
filters. The FTC, along with the FDA, EPA, and over thirty states, is
making a concerted effort to search the Internet for deceptive claims
about these products. Based on the results of this effort, the FTC will
take follow-up law enforcement action as appropriate.
B. Information Exchanges with Watch-Dog Groups and Other Law Enforcers
The Commission's efforts to track and analyze consumer complaints
through Consumer Sentinel are complemented by a proactive program to
uncover fraud and deception by partnering with other law enforcers as
well as public- and private-sector charity watch-dog groups. For
example, the Commission regularly participates in an e-mail discussion
list that has over 100 subscribers from 40 states, consisting of
government regulators and law enforcement officials involved in
regulating charities and charitable fundraisers. Subscribers exchange
daily messages about a variety of topics, including possible scams,
registration requirements, and recent legal actions. The Commission
also monitors other public Internet sources, including on-line
discussions of charity issues.
In addition, since September 11th, the Commission, spearheaded by
its Northeast Regional Office, has reached out aggressively to others
in the New York-area law enforcement community. Further, as discussed
below, the Commission's Northeast Regional Office has launched a full-
scale consumer education campaign. Staff in the Northeast Regional
Office has communicated regularly with a New York based consumer
protection group that provides a venue for exchanging information about
possible charity or other disaster-related scams. The ad hoc group also
includes the New York City Department of Consumer Affairs, the Attorney
General's Office in New York, and the New York State Consumer
Protection Board. The Commission has also partnered with the Secret
Service, FEMA, and the Red Cross to pursue possible fraudulent
fundraisers.
State charity officers are another invaluable source of
information. After the September 11th attacks, Commission staff
attended the annual Charitable Trusts Solicitations Seminar, sponsored
by the National Association of Attorneys General and the National
Association of State Charity Officials. The staff met with state
officials, representatives of the Internal Revenue Service, charity and
foundation officers, fundraising counsel, professional solicitors and
private attorneys. Both in closed-door sessions with other law
enforcement officers and in open sessions with representatives from the
private nonprofit sector, Commission staff participated in informative
discussions about possible fraudulent charitable fundraising, as well
as recent law enforcement actions.
C. Other Investigative Tools
In addition to Consumer Sentinel and exchanges with other law
enforcers and watch dog groups, Commission staff is surveying media
reports. The Commission has closely monitored reports about fraudulent
solicitation, has followed up on possible scams, and has worked with
other law enforcement agencies in investigating those that look
genuinely problematic.
The Commission's assortment of investigational tools has enabled it
to develop robust experience bringing law enforcement actions against
fraudulent fundraisers and other disaster-related scam artists. These
law enforcement efforts are discussed below.
III. THE FTC'S LAW ENFORCEMENT ACTIVITIES AGAINST FRAUDULENT FOR-PROFIT
TELEFUNDERS AND OTHER DISASTER-RELATED SCAMS
Acting within the parameters of its authority, the Commission has
asserted a strong enforcement presence in the fraudulent fundraising
arena. In the past decade, the Commission has filed over 25 cases in
federal district courts challenging deceptive fundraising practices by
for-profit solicitors. Many of these cases involved ``badge fraud,''
where a telemarketer poses as a law enforcement officer or an affiliate
and typically claims that he is raising money to support law
enforcement efforts in the donor's local area. In fact, the
telemarketer is not a law enforcement officer or affiliate, and the
money is not used to support local efforts, as promised.
The Commission ultimately obtained injunctions stopping the
deceptive fundraising and, in many cases, recovered monetary redress
for consumers. The Commission has also obtained injunctions against
these for-profit solicitors, which, among other things, have prohibited
deceptive fundraising and other remedies.
It is the Commission's experience that meaningful consumer
protection also requires coordinated law enforcement with other state
and federal agencies. The FTC has organized two ``sweeps'' of multi-
state, multi-agency law enforcement actions targeting fraudulent
charitable solicitation. In 1997, the FTC announced Operation False
Alarm, which targeted badge-related solicitation fraud. Federal and
state officials brought 57 law enforcement or regulatory actions as
part of this initiative. In 1998, the Commission announced Operation
Missed Giving, which also targeted deceptive fundraising. In that
sweep, federal and state officials brought 39 law enforcement and
regulatory actions.
In addition, the Commission has experience prosecuting other types
of non-charity but nevertheless disaster-related scams. For example,
the Commission is contacting marketers of home-testing kits for anthrax
and demanding substantiation for their efficacy claims. Drawing on its
past experience prosecuting marketers of ineffective at-home test kits
for HIV, the Commission is able to identify possible law violators and
quickly bring them into compliance with the law.
The Commission intends to remain active in these areas in the
future. However, the Commission recognizes that vigilant investigation
and law enforcement activities alone cannot wipe out fundraising fraud.
As set forth below, meaningful consumer protection also depends on
education.
IV. THE FTC'S CONSUMER AND BUSINESS EDUCATION EFFORTS
The FTC's consumer and business education program communicates
anti-fraud and educational messages to reach vast numbers of people in
creative and novel ways quickly, simply and at low cost. In the wake of
the September 11th terrorists attacks, the FTC has alerted consumers to
potential charity frauds. As mentioned earlier, the Commission's
Northeast Regional Office has been actively involved in the
Commission's outreach to the New York area after September 11th. On
September 20th, the Northeast Regional Office held a press conference
in New York City with city, state and federal agencies and nonprofit
organizations to announce a coalition to protect New York consumers and
provide essential information during this time of crisis. The Northeast
Region staff distributed a new Consumer Alert, ``Helping Victims of the
Terrorist Attacks: Your Guide to Giving Wisely,'' which was posted to
the FTC website, www.consumer.gov.
In a little over a month, this single publication has been accessed
more than 9,400 times. The Commission also developed a dedicated
webpage, where consumers and businesses can obtain more information
about donating wisely and filing a complaint, and a banner ad promoting
the site.
The FTC also released other consumer and business information
related to the attacks. They include:
``Out of Work? How to Deal with Creditors,'' (e-mailed to more than
1,500 daily and weekly newspaper editors).
``Offers to Treat Biological Threats: What You Need to Know,'' produced
in cooperation with the Centers for Disease Control and
Prevention and the Food and Drug Administration. This Alert was
e-mailed to consumer and health editors at more than 17,000
radio and TV stations and daily newspapers nationwide.
``FTC Explains `Made in USA' Standard To Confirm Consumer Confidence''
(more than 3,900 web hits to-date).
``Selling `American-Made' Products? What Businesses Need to Know About
Making Made in USA Claims'' (more than1,600 web hits to-date).
It is worth noting that while the FTC Headquarters building was
without mail service for nine days, the Commission used electronic mail
to continue the agency's mission of getting practical, plain language
information out to the American public.
FTC staff also has been active in the Washington, D.C. area. At a
town hall meeting focusing on the local impact of the September 11th
events and the anthrax investigations, the FTC distributed more than
1,000 related consumer publications to District residents. The meeting
was hosted by Del. Eleanor Holmes Norton (D-D.C.) at the Washington
Convention Center on October 29.
V. CONCLUSION
Thus far, it appears that consumers have generally shown themselves
to be both generous to legitimate charities and aware of the potential
for con-artists posing as fundraisers. The press has been warning
consumers to be wary of possible scam artists trying to take advantage
of consumers' desire to help victims of the attacks. The Commission has
found few such schemes. The Commission will continue to monitor
developments closely, stands ready to take appropriate law enforcement
action, and continues to educate consumers about how to avoid deceptive
solicitations and to inform businesses how to comply with the laws.
I would be pleased to answer any questions.
Mr. Greenwood. Thank you, Mr. Beales, for your testimony.
Mr. Taylor, you are recognized for 5 minutes for your
testimony. Thank you for being with us, sir.
TESTIMONY OF HERMAN ART TAYLOR
Mr. Taylor. Thank you, Mr. Chairman. The BBB Wise Giving
Alliance is a nationally recognized monitoring organization
that sets accountability standards for charities and other
soliciting nonprofits. Often referred to as a charity watchdog,
our core mission is to provide information to donors, to assist
them in making knowledgeable choices about giving. We work with
many audiences, including charities, governmental agencies, the
media, corporate contribution departments and Better Business
Bureaus. However, the donor is our primary constituent.
We commissioned Princeton Research to interview donors to
determine what their expectations were. On a range of charity
issues, the first thing we found is that 86 percent of
Americans gave to charities last year. Therefore, we found that
giving to charities in this country is pretty much a universal
experience. And as Congressman Whitfield noted earlier,
Americans have very high expectations for ethics and
accountability by the charities but are often frustrated at not
being able to find the necessary information to make giving
decisions.
Most people, about 70 percent, said it is difficult to tell
whether a charity soliciting their contribution is legitimate,
and many, 72 percent, also say that it is difficult to choose
between organizations that raise money for similar causes.
Donors want to know most of all about charity finances but also
want them to be clear about what they are soliciting for.
Also as Congressman Tauzin noted earlier, people expect the
money to be used for current purposes. Our survey found that 63
percent of the public expects the money to be used for current
needs rather than put into reserve.
Very soon after September 11, we received reports of
unsolicited e-mails and phone calls to consumers that sought
donations for victims of terrorist attacks, including requests
for the recipient's credit card numbers. We immediately issued
a press release cautioning donors against fraudulent appeals
that seek to use that national tragedy to take advantage of
America's generosity. This alert provided a series of tips for
donors to help them evaluate appeals. We were very happy that
this release was widely used by the media, and the weekend
after we issued the release, we got more than 17,000 hits on
our Web site from people looking for those tips.
The very first tip was to be wary of appeals that were long
on emotion but were short on describing what a charity would
actually do to address the needs of victims and their families.
We also noted that charities should be willing to provide basic
information that describes the charity's programs and finances.
Even newly created groups should have some basic information
that describes their program.
In cooperation with the Better Business Bureau of
Metropolitan New York, we will soon make available a special
section of our Web site that will provide information on
organizations soliciting for September relief programs, and we
hope all the organizations will provide us the information.
We are still receiving inquiries from potential donors
asking specific questions about these charities, but we are
also beginning to hear concerns from those who have already
given and who feel their contributions may not be used as they
expected. For example, a consumer recently wrote, if people
knew what their money was really being used for, that it was
not going to be used for the victims and their families, they
probably would not have made the contribution.
The American public has stepped up to the plate and has
given in an unprecedented way. Now the challenge rests with the
charitable sector to be equally forthcoming regarding the use
of these donations. Broader accountability is called for.
Collaboration is called for. How the recipient organizations
handle this enormous resource and how they communicate what
they are going to do with these funds will have a long-term
effect on what donors do in the future. We have a number of
recommendations which we have submitted for the record, and we
would be glad of course to answer any questions about this
event.
[The prepared statement of Herman Art Taylor follows:]
Prepared Statement of Herman Art Taylor, President and CEO, BBB Wise
Giving Alliance.
Good Afternoon: I am Art Taylor, president and CEO of the BBB Wise
Giving Alliance. I appreciate the opportunity to appear before this
subcommittee to report on our donor education programs and also to
share with you some of our concerns arising from September 11
solicitations and the use of 9-11 charity donations.
The BBB Wise Giving Alliance is a nationally recognized monitoring
organization that sets accountability standards for charities and other
soliciting nonprofits. The Alliance is the organization resulting from
the recent merger of the Council of Better Business Bureau's Foundation
and its Philanthropic Advisory Service and the National Charities
Information Bureau. Between the two organizations, we have over 100
years of experience in reviewing and reporting on charities.
Often referred to as a ``charity watchdog,'' our core mission is to
provide information to donors to assist them in making knowledgeable
choices about giving. We work with many audiences, including charities,
governmental agencies, charity governing boards, the media, corporate
contribution departments, Better Business Bureaus, and nonprofit
umbrella organizations. However, the donor is our primary constituent
and it is from the position of donor ``stand in'' that I make my
remarks today.
I can say four things about donors that are relevant to our
discussion today. First of all, there are a lot of them. The Alliance
recently commissioned Princeton Survey Research Associates to conduct a
major study on donor expectations as part of the process to revise our
charity accountability standards. Princeton Research interviewed 2000
members of the general public on a range of charity accountability
issues and found that 86% of Americans gave to charity last year.
Charitable giving is almost a universal experience in this country.
Second, as the survey found, Americans have very high expectations
for ethics and accountability by charities, but are often frustrated at
not being able to find the necessary information to make their
decisions about giving. Most people (70%) said it is difficult to tell
whether a charity soliciting their contributions is legitimate, and
many (72%) also say it is difficult to choose between organizations
that raise money for similar causes. Donors want to know most of all
about charity finances, but also important to them are the clarity of a
charity's advertising and promotion and the effectiveness of a
charity's programs.
We were not surprised at these findings. We talk to donors every
day who are looking for information to make informed giving decisions.
They want to give, but they want to make certain their gifts are well
used and for the purposes given.
As part of our basic service, the Alliance issues reports on
individual national charities that include an evaluation of the charity
in relation to the voluntary CBBB Standards for Charitable
Solicitations. These standards address public accountability issues,
financial activities such as how much the charity spends on its
programs, accuracy of fund raising appeals, fund raising practices and
also governance issues. We focus our reporting efforts on those
charities that donors and potential donors are asking about, some of
which are long established, others newly created. On average, about 75%
of these national charities meet all of our standards, and about 25%
don't meet one or more of our guidelines.
The Alliance reports on individual charities are detailed, often
covering several pages, and set out not only to reveal whether or not
the organization meets our standards, but also information on program
service activities, fund raising practices, charity governance,
executive compensation, sources of funds, and how the organization
spends its money. Our reports are available directly from our office in
Arlington, Virginia, through all 129 local Better Business Bureaus in
the United States and on our website www.give.org. We also issue a
quarterly guide summarizing our evaluation findings and reporting on
other topics of interest to donors.
In addition, we issue special alerts and advisories on topics of
concern to donors. These range from tips on police and firefighter
appeals, to what you should know about car donations to precautionary
advice in the face of disaster appeals.
My third point concerns the impact of the Internet as a tool for
charity solicitations and donations. Our survey research has shown that
the Internet is used by the public more as a tool for gathering
information about charities, than as a means to donate. While over half
(56%) of regular online users are very likely to go to a charity's web
site for financial information if they are considering making a
charitable contribution, less than one in 10 (6%) of Americans report
having ever made a charitable contribution of $10 or more online. Our
survey also shows that the public is concerned about the privacy and
security of their Internet charity contribution transactions. However,
despite this, many more Americans contributed online for the first time
in response to 9-11 relief efforts. If this increased Internet giving
is to continue beyond the current crisis charities must address these
concerns.
My fourth point concerns the vulnerability of donors, particularly
in the wake of disasters. Over the years, we have observed that shortly
after every major disaster--flood, hurricane, or the Oklahoma City
bombing--a flurry of fund raising appeals to help the victims begins.
While most of these appeals are well intentioned and worthy of support,
others are not. Americans are very generous and, unfortunately, there
are those who are eager to take advantage of this generosity for their
own gain.
Very soon after the September 11th events, we received reports of
unsolicited emails and phone calls to consumers that requested
donations for the victims of the terrorist attack, including asking for
the recipient's credit card numbers. We immediately issued a press
release cautioning donors against fraudulent appeals that seek to use a
national tragedy to take advantage of American generosity. This alert
provided a series of tips for donors to help evaluate appeals. A copy
is included with my testimony.
The very first tip was to be wary of appeals that are long on
emotion, but short on describing what the charity will do to address
the needs of victims and their families. We also noted that charities
should be willing to provide basic information that describes the
charity's programs and finances. Even newly created organizations
should have some basic information available.
In cooperation with the Better Business Bureau of Metropolitan New
York, we will soon make available a special section on our websites
that will provide information on organizations that have been
soliciting for September 11 relief programs. We have requested
information from approximately 170 such organizations for this listing.
Our objective here is to provide a central information resource to
donors who are responding to appeals or who are looking to direct their
support to specific types of assistance.
We are still receiving inquires from potential donors asking about
specific charities. But, we are also beginning to hear concerns from
those who have already given and who feel their contributions may not
be used as expected. For example a consumer recently wrote: ``We have
donated $130 to the wtc disaster fund and my employer has graciously
matched that amount. We have now found out that our money may be used
for other things. We insist that our monies be used for what they were
intended. We would like our funds to be placed in an account
specifically used for the wtc disaster or be promptly returned so that
we may give it to a charity that will adhere to our wishes.''
Or another who said ``if people knew that this money was not really
going to help victims' families with the things they really need, like
with bills because of the loss of an income, they would in many cases
never have given the money they did. People would be outraged to hear
this.'' Another stated ``I am appalled.'' The messages are consistent--
``I gave to help the victims and now I am hearing that my donation will
not be used as I intended.'' I believe this is only the beginning of
these complaints.
We are at a critical juncture here. The American public has stepped
up to the plate and given in an unprecedented way. Donations total over
a billion dollars and are growing. Now the challenge rests with the
charitable sector to be equally forthcoming to the public regarding the
use of these donations. Broad accountability is called for. How the
recipient organizations handle the enormous resources they have been
given and how well they communicate with the public about what they
have done and plan to do in the future will have an impact on future
charitable giving at all levels. There is a lot riding on this.
On our website, we have posted a number of recommendations to
charities that we believe will help achieve this accountability and can
help assure donors that their confidence in giving is well placed. Our
recommendations, among other things, include the need for all
organizations to: plan for a full accounting of all funds raised and
all expenditures by year's end, regardless of the size of the
organization; provide for clear descriptions of the programs or
services in all future fund raising appeals so that donors and
potential donors will know the specific ways that their donations will
provide assistance; and maintain strong internal controls on income and
expenses. Finally, we recommend that charities establish a board-
approved plan for how contributions will be spent and a projected time
line for these expenditures and revisit this plan as needs evolve.
Again, I appreciate the opportunity to be with you today and look
forward to answering any questions.
Mr. Greenwood. Thank you, Mr. Taylor, for your testimony as
well.
Let me just warn everyone that the bell is going to ring in
about 2 minutes, which will signify that we have a series of
votes, and so you are going to get to go home for dinner early
tonight. Let me ask a question that I think each of you might
be able to respond, you, Mr. Beales, in terms of what the law
says, to the extent that it does say anything; you, Mr. Taylor,
in terms of what your organization recommends, and I know you
have got a series of great recommendations. I have looked at
the Better Business Bureau's Wise Giving Guide, Donor
Expectations Defined, Giving in the Aftermath of September 11.
It is a great document, and other documents as well.
Yesterday I went into a department store and I bought this
necktie that has flags on it, and I noticed on the table of
neckties with flags on it, and almost every one of them had a
tag attached to it that said a percentage of the profits or a
percentage of the costs or a percentage of the proceeds from
this purchase will go to a fund related to the events of
September 11. I realize that I had no way of knowing what that
percentage would be, and we already have seen, and I am sure we
will continue to see, a plethora of products and maybe perhaps
services, advertised in this way. Some of it will be very, very
legitimate, and some of it will be a scam.
Beginning with you, Mr. Beales, and then going to you, Mr.
Taylor, A, what does the law say, if anything, about this,
because 100 percent of the profits could mean that the company
leadership takes a million dollars in salaries and then the
profit is a couple dollars and that goes to a fund. What does
the law say about how these representations are made, Mr.
Beales, and Mr. Taylor, what should a smart shopper or smart
contributor do to protect themselves to make sure that
significant portions really get to the needy folks as opposed
to just a come-on to sell product.
Mr. Beales.
Mr. Beales. Well, from our perspective, the question would
be, is the original claim that they made a contribution
deceptive? Is it likely to mislead consumers who are acting
reasonably about something that is important? I think there is
no question it is important, and so the question would be, did
they actually give the money? And if they promised in your
hypothetical 100 percent of profits and there were no profits
and they didn't tell you that, then I think that would be a
problem. That would be one that we would be very----
Mr. Greenwood. Will the FTC--how do you regulate this?
There will be thousands of products, if there aren't already,
with labels and tags attached, making a claim that some portion
of the proceeds go to the World Trade Center Fund or what have
you. What does the FTC do in terms of looking into this? Is it
on a complaint basis only?
Mr. Beales. It is certainly not complaints only. On
anything where we had some--where we had any indication,
whether it was a complaint or maybe it is a complaint from one
of the potential recipient organizations that they are not
getting money from these groups, then we would ask to see what
was the evidence that supported the original claim. We could do
that for anybody and would if there was any indication at all
that there might be a problem.
Mr. Greenwood. Clearly, if the representation made is that
a portion or a significant portion of the proceeds shall go to
the victims, it is going to be very difficult, I would assume,
to enforce any existing law, regulation, since these are such
nebulous terms.
Mr. Beales. Well, I think that we would interpret the
proportion or the portion kind of claim as saying that it was
some appreciable portion. If it is merely a trivial proportion,
then I think that would be a claim that is deceptive.
Mr. Greenwood. And they would violate which law?
Mr. Beales. Section 5 of the Federal Trade Commission Act.
Mr. Greenwood. Okay. Mr. Taylor, what would you recommend
to shoppers such as myself purchasing neckties and other items
in terms of really having the knowledge to back up the claim?
Mr. Taylor. Congressman, I would first say, if you like the
tie, buy it, but don't buy it because you think money is going
to victims. It may in fact go to victims, but who knows. If you
want to make a contribution, make a contribution directly to
either the organization or to the fund that can serve the needs
of the victim. We encourage all of our donors to ask questions,
though. I think that is the most important thing you can do to
protect yourself. If you want to know how much is going, ask.
Get it in writing.
Mr. Greenwood. Okay, thank you for your comments. The
gentleman from Florida, Mr. Deutsch, is recognized for 5
minutes.
Mr. Deutsch. If either one of you can give us a sense of
the allegations of fraud involving any of the charities that
have been raising funds related to the September 11 offense? I
mean, have you----
Mr. Taylor. Yeah. What I can say is that we haven't
uncovered any specific fraud, but early on, we did see some
questionable solicitation practices. We noticed that there was
a lot of solicitation going on in the street door to door,
phone calls, asking for credit cards and spam e-mails and
things of that nature, but we haven't uncovered any specific
fraud at this point. But we do have our bureaus on alert to
receive any complaint that they might uncover.
Mr. Deutsch. Mr. Beales.
Mr. Beales. We have not seen instances of what we would
call fraud. We have seen some potential problems that were very
quickly fixed or very quickly ceased, but we have not seen any
indication in any of the complaints we've pursued of something
we've called fraud. And we have been looking very actively
following up every complaint we get about fund-raising matters.
Mr. Deutsch. Both of you sat through the several hours of
hearings that we have had, so you heard a lot of discussion
about the Red Cross and its solicitation and its use of funds
related to its Liberty. How would you describe that? Do you
have any issues that you would raise with the Red Cross in
terms of how the solicitations occurred? Would you advise them
in any direct or indirect way? Was it a good way--in the
hindsight of, you know, time, would you recommend that they
have done it differently?
Mr. Taylor. I think that the challenge before us today is
to get an organization like the Red Cross to appreciate that
people see their money going directly to victims, and they do
not see their money being used for longer-term-type needs. As
our survey points out, most people expect the money to go for
current needs, and this notion that money is going to be put in
a reserve will be very troubling for donors.
Mr. Deutsch. Mr. Beales?
Mr. Beales. Well, I think our advice to anyone would be the
same, is really be clear about what it is you're asking and
what it is you are going to use the money for, and be as clear
as possible so the consumers will understand and can decide
whether that's something they want to contribute their money to
or not.
Mr. Deutsch. And again, you gave us sort of a political
answer, which is fine. I just want to press you a little bit.
Based upon what you know what occurred, would you critique what
they did in the hindsight of time that--was it correct, or was
it incorrect? Would you advise them to do it differently in the
future?
Mr. Beales. We have not looked closely. We do not have
jurisdiction because the Red Cross is not for profit. We have
not looked closely at the advertising or the claims. And
without doing that, I don't think I could offer an opinion.
Mr. Deutsch. The last question that I would have is related
to and for either one of the other panels. We didn't have a
chance to talk about it. There's this whole issue that is
coming up as it relates to Congress in terms of the victims'
compensation fund and the issue that charitable contributions
could be considered an offset of that fund. Do either one of
you have an opinion of whether or not that would be an
appropriate offset or not in terms of the victims' compensation
fund?
Mr. Taylor. Well, I think it would have been ideal if the
American public's contributions toward the relief effort would
have been put to immediate needs, which is what they expected,
and then the fund which the Congress is hoping to set up would
be used to take care of the more long-term needs that are still
being uncovered. I think part of the problem that we're
hearing--that we've heard today is that the charities are
trying to figure out what longer-term needs are, and the public
really expected them to deal with the immediate needs.
Mr. Deutsch. Mr. Beales?
Mr. Beales. I'm glad that we don't have jurisdiction in
this area and you have to wrestle with this difficult problem.
Mr. Deutsch. I yield back.
Mr. Greenwood. Thank the gentleman.
The gentleman from New Hampshire is recognized for 5
minutes to inquire.
Mr. Bass. Thank you, Mr. Chairman.
Mr. Beales, if I could read from your testimony here as a
preface to my question, you state on page 3, and I quote,
charitable organizations are closely regulated by the States.
Most State governments implement detailed registration
reporting requirements that are crucially effective oversight
of charities. Under the Federal Trade Commission Act, the
Agency's mandated to take action against, quote, unfair or
deceptive acts or practices that are, quote, in or affecting
commerce. The FTC also equips the FTC with a wide array of
tools to enforce the mandate, but section 4 and 5 of the FTC
Act provide the Commission with jurisdiction over corporations
only if organized to carry on business for their own profit or
for that of their members. Over the years the Federal courts
have construed section 4 to bar the Commission from suing any
truly nonprofit organization under the FTC Act, thereby
removing many charitable organizations from the FTC's scope of
authority.
You've heard we've had some interesting discussion here
today. In light of that, do you think the FTC needs additional
authority to protect consumers from false and misleading
practices involving charities?
Mr. Beales. The USA PATRIOT Act gave us additional
authority under the Telemarketing Sales Act because it extended
that act to cover charitable solicitations. We are in the
process of exploring the changes in our telemarketing sales
rule that we should make in order to implement that statute,
but there clearly is an expansion of our jurisdiction that
resulted from that act.
The second point I'd make is in the cases we've seen of
charitable fraud, it has not been particularly difficult to
argue that the fund-raiser really was for profit and/or that
the charity was essentially a front and to pierce that front,
to argue that this really was for someone's profit. And we have
been successful with making that argument in the courts. So for
the kinds of things that I think are the problems for the
fraudulent solicitations, I think we have enough authority in
order to accomplish that mission.
Mr. Bass. Let me just expand on that a little bit further.
Suppose a nonprofit or a charitable organization says that they
are raising money for one purpose and then uses it for another.
That would not come under the jurisdiction of the FTC. But if
that were a for-profit corporation, you'd be able to sue them.
Do you think you should have the ability to do the same thing
that you do for for-profit corporations for not-for-profit
corporations?
Mr. Beales. Well, I think when you get into legitimate not-
for-profit organizations, the first amendment issues involved
in a hypothetical like that get very much more difficult. It's
not being done to raise--it's not being done for anybody's
profit. It's being done in pursuit of a cause as the members--
as the members of that organization see that cause. I mean, the
Supreme Court has said you can't require disclosure of the
fraction of money that goes to fund-raising. I think requiring
more information about the specific uses would raise very
similar difficulties under the first amendment.
Mr. Bass. Thank you, Mr. Chairman.
Mr. Greenwood. The Chair thanks the gentleman.
The gentleman from Kentucky is recognized for 5 minutes.
Mr. Whitfield. I just have a few brief questions. I wanted
to ask Mr. Taylor, the Better Business Bureau Wise Giving
Alliance, is that a part of the Better Business Bureau?
Mr. Taylor. We are an affiliated organization of the Better
Business Bureau, but we are a separate (c)(3) charitable
organization ourselves.
Mr. Whitfield. So you are affiliated, but a separate
organization run independently?
Mr. Taylor. Yes.
Mr. Whitfield. And your mission or purpose is primarily to
focus on charitable organizations and whether or not they meet
certain standards; is that correct?
Mr. Taylor. That's correct. We set standards for charities,
and we evaluate them when we're asked to to see if those
organizations meet our standards. And our--what we see our role
is is a stand-in for the donor essentially. We want to give the
donor a voice with the charitable organization.
Mr. Whitfield. Not having had the opportunity to look at
this, but this is your donor expectations defined, and they
have a list of charities, and some of them have met standards,
and they have a check by their names. Others have not, and they
would list like standards not met, A1, B1, B2. I guess that
refers to some standard that your organization has developed.
Mr. Taylor. That's right. In the back of our guide there is
a listing of all of our standards. So they are referenced by
alphabet, and you can tell whether that standard is met or not.
Mr. Whitfield. How is your organization financed?
Mr. Taylor. We are financed, like most charities, with
individual contributions and foundation gifts and other sorts
of charity.
Mr. Whitfield. I think you do a good job. I yield back my
time.
Mr. Greenwood. I thank the gentleman for yielding.
Thank you, Mr. Beales, thank you, Mr. Taylor, for your
testimony and for your forbearance through our 4\1/4\ hour
schedule. This hearing is now adjourned.
[Whereupon, at 6:45 p.m., the subcommittee was adjourned.]